Thread: Calamitous day sees 3 banks, 2 credit unions seized

Calamitous day sees 3 banks, 2 credit unions seized

Three banks, two corporate credit unions taken over by regulators in evening

By John Letzing, MarketWatch

Last update: 8:06 p.m. EDT March 20, 2009
Comments: 943

SAN FRANCISCO (MarketWatch) -- The pace of the ongoing credit crisis quickened significantly Friday when regulators seized three banks and placed two large corporate credit unions into conservatorship, citing a need to "stabilize the corporate credit union system."

Banks in Colorado, Georgia and Kansas were closed by regulators, bringing the number of bank failures this year to 20, while the National Credit Union Administration Board seized corporate credit unions in California and Kansas that have a combined $57 billion in assets.

Corporate credit unions are chartered to act as a sort of clearinghouse for the credit unions that serve consumers.

The Federal Deposit Insurance Corporation said that Stockbridge, Ga.-based FirstCity Bank was closed by regulators, adding that it will mail checks to FirstCity's insured depositors Monday morning.

The failed bank's direct deposits from the federal government such as Social Security and veterans' payments will be transferred to SunTrust Banks Inc. (STI:SunTrust Banks Inc

the FDIC said. FirstCity had $297 million in assets and $278 million in deposits as of March 18, the FDIC reported. It also had roughly $778,000 in deposits that exceeded the federal deposit-insurance limit of $250,000.

FirstCity becomes the eighth Georgia-based bank to fail since the economy began sliding into crisis last August, according to FDIC data. The last Georgia bank to fail was Freedom Bank of Georgia on March 6, the regulator said. It estimated the cost of FirstCity's failure to the deposit insurance fund as roughly $100 million.

The FDIC also said Colorado Springs-based Colorado National Bank was closed, and Texas-based Herring Bank will assume all of the failed bank's deposits.

Colorado National had $123.5 million in assets as of Dec. 31, and $82.7 million in deposits, the FDIC said. It estimated the cost of Colorado National's failure to the deposit insurance fund as roughly $9 million.
Paola, Kan.-based Teambank also was closed by regulators, the FDIC said, while Missouri-based Great Southern Bank will assume its deposits.
Teambank had $669.8 million in assets as of Dec. 31, and $492.8 million in deposits, the FDIC said. It estimated the cost of Teambank's failure to the deposit insurance fund as roughly $98 million.

Meanwhile the National Credit Union Administration said Lenexa, Kan.-based U.S. Central Federal Credit Union and San Dimas, Calif.-based Western Corporate were placed into conservatorship "to protect retail credit union deposits and the interest of the National Credit Union Share Insurance Fund."

U.S. Central has roughly $34 billion in assets and WesCorp has $23 billion in assets, the NCUA said.

The NCUA said that service continues uninterrupted at both large corporate credit unions, and members are free to continue making deposits and accessing funds.

"Credit unions that serve consumers remain very strong, with net worth exceeding 10 percent of assets, healthy growth in assets, membership, and loan portfolios despite the difficult economy," according to the regulator.

John Letzing is a MarketWatch reporter based in San Francisco.

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Insurance companies are being taken over by the insurance commissioners, too. I opened by annual report and got the news. Most people do not even look at these sealed booklets.