statewide bank

Failure Friday

By Ray on March 12, 2010

Another Friday and another busy night for the FDIC who had to close 3 institutions tonight bringing the total for 2010 to 30. On the bright side of things the FDIC troubled bank list is getting smaller. It was 702 and now it is now in the high 600’s unless they added more to the list. No worries though, everything is fantastic, oh did I mention Kansas City is closing half of its schools and Dade County Florida is under investigation for misleading investors on its finances, makes you wonder about the recent CA bond issue doesn’t it, or not.

Anyhow, tonight’s lucky winners are:

Bank	State	Assets	Deposits
Statewide Bank	LA	$243.2M	$208.8M
Old Southern Bank	FL	$315.6M	$319.7M
The Park Avenue Bank	NY	$520.1M	$494.5
Total	3	$1078.9M	$1023M

Apparently The Park Avenue Bank had a killer art collection complete with Andy Warhol pieces, I wonder how that will be handled, and its own curator. Regardless, it was another somewhat large night for the FDIC with assets of the failed institutions totaling over $1B, I am not including Thursday’s closure. While the losses may not be huge they are persistent and it is like a death by a thousand cuts for an institution running a negative balance sheet. Again, no worry as everything is fine.

Now comes the fun part, how much did the FDIC actually lose tonight?

Bank	Estimated FDIC Losses	Loss-Share Agreement
The Park Avenue Bank	$50.7M	$379.8M
Old Southern Bank	$94.6M	$282.7M
Statewide Bank	$38.1M	$163.5M
Total	$183.4M	$826M

As you can see the losses and loss-share agreements are about $1B altogether so all these little banks add up. All the banks tonight were merged with another so nothing other than the name, and the fees depositors pay, will change tomorrow. While these banks were acquired it is important to realize that not every failed bank is bought. If your bank fails and it is not bought anything over the FDIC guarantee limit may not be covered, food for thought.

The Park Avenue Bank:

The Park Avenue Bank, New York, New York, was closed today by the New York State Banking Department, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Valley National Bank, Wayne, New Jersey, to assume all of the deposits of The Park Avenue Bank.

The four branches of The Park Avenue Bank will reopen during normal business hours beginning tomorrow as branches of Valley National Bank. Depositors of The Park Avenue Bank will automatically become depositors of Valley National Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branch until they receive notice from Valley National Bank that it has completed systems changes to allow other Valley National Bank branches to process their accounts as well.

This evening and over the weekend, depositors of The Park Avenue Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of December 31, 2009, The Park Avenue Bank had approximately $520.1 million in total assets and $494.5 million in total deposits. Valley National Bank will pay the FDIC a premium of 0.15 percent to assume all of the deposits of The Park Avenue Bank. In addition to assuming all of the deposits of the failed bank, Valley National Bank agreed to purchase essentially all of the assets.

The FDIC and Valley National Bank entered into a loss-share transaction on $379.8 million of The Park Avenue Bank’s assets. Valley National Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-640-2538. The phone number will be operational this evening until 9:00 p.m., Eastern Standard Time (EST); on Saturday from 9:00 a.m. to 3:00 p.m., EST; on Sunday from 9 a.m. to 3:00 p.m., Eastern Daylight Time (EDT); and thereafter from 8:00 a.m. to 8:00 p.m., EDT.

As part of this transaction, the FDIC will acquire a cash appreciation instrument. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $50.7 million. Valley National Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. The Park Avenue Bank is the 28th FDIC-insured institution to fail in the nation this year, and the second in New York. The last FDIC-insured institution closed in the state was LibertyPointe Bank, New, York, New York, on March 11, 2010.

Old Southern Bank:

Old Southern Bank, Orlando, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Centennial Bank, Conway, Arkansas, to assume all of the deposits of Old Southern Bank.

The seven branches of Old Southern Bank will reopen on Monday as branches of Centennial Bank. Depositors of Old Southern Bank will automatically become depositors of Centennial Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their former Old Southern Bank branch until they receive notice from Centennial Bank that it has completed systems changes to allow other Centennial Bank branches to process their accounts as well.

This evening and over the weekend, depositors of Old Southern Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of December 31, 2009, Old Southern Bank had approximately $315.6 million in total assets and $319.7 million in total deposits. Centennial Bank will pay the FDIC a premium of 1.00 percent to assume all of the deposits of Old Southern Bank. In addition to assuming all of the deposits, Centennial Bank agreed to purchase essentially all of the failed bank’s assets.

The FDIC and Centennial Bank entered into a loss-share transaction on $282.7 million of Old Southern Bank’s assets. Centennial Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-822-1918. The phone number will be operational this evening until 9:00 p.m., Eastern Standard Time (EST); on Saturday from 9:00 a.m. to 6:00 p.m., EST; on Sunday from noon to 6:00 p.m., Eastern Daylight Time Eastern Daylight Time (EDT); and thereafter from 8:00 a.m. to 8:00 p.m., EDT.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $94.6 million. Centennial Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. Old Southern Bank is the 29th FDIC-insured institution to fail in the nation this year, and the fourth in Florida. The last FDIC-insured institution closed in the state was Marco Community Bank, Marco Island, February 19, 2010

Statewide Bank:

Statewide Bank, Covington, Louisiana, was closed today by the Louisiana Office of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Home Bank, Lafayette, Louisiana, to assume all of the deposits of Statewide Bank.

The six branches of Statewide Bank will reopen on Saturday as branches of Home Bank. Depositors of Statewide Bank will automatically become depositors of Home Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their former Statewide Bank branch until they receive notice from Home Bank that it has completed systems changes to allow other Home Bank branches to process their accounts as well.

This evening and over the weekend, depositors of Statewide Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of December 31, 2009, Statewide Bank had approximately $243.2 million in total assets and $208.8 million in total deposits. Home Bank did not pay the FDIC a premium to assume all of the deposits of Statewide Bank. In addition to assuming all of the deposits, Home Bank agreed to purchase essentially all of the failed bank’s assets.

The FDIC and Home Bank entered into a loss-share transaction on $163.5 million of Statewide Bank’s assets. Home Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-913-3062. The phone number will be operational this evening until 9:00 p.m., Central Standard Time (CST); on Saturday from 9:00 a.m. to 6:00 p.m., (CST); on Sunday from noon to 6:00 p.m., Central Daylight Time (CDT); and thereafter from 8:00 a.m. to 8:00 p.m., (CDT).

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $38.1 million. Home Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. Statewide Bank is the 30th FDIC-insured institution to fail in the nation this year, and the first in Louisiana. The last FDIC-insured institution closed in the state was The Farmers Bank & Trust of Cheneyville, Cheneyville, December 17, 2002