July 21, 2012, 10:29 a.m. EDT

Banks closed in 4 states; 2012 tally hits 38

By Alan Zibel
(Updates with Second Federal Savings and Loan Association of Chicago failure.)

Regulators closed two small banks in Georgia as well as banks in Florida, Kansas and Illinois on Friday, bringing the nationwide tally of bank failures up to 38 for the year.

The Florida Office of Financial Regulation closed Naples, Fla.-based Royal Palm Bank and appointed the Federal Deposit Insurance Corp. as a receiver. First National Bank of the Gulf Coast, also based in Naples, will assume all of the three-branch bank's $85.1 million in deposits.

Royal Palm Bank had about $87 million in assets at the end of March. Those assets were purchased by Royal Palm Bank.

The FDIC, which insures deposits of up to $250,000, estimated that the bank's failure will cost the agency's deposit insurance fund $13.5 million. Royal Palm Bank was the fifth Florida bank to fail this year.

In addition, the Georgia Department of Banking and Finance closed two banks: Georgia Trust Bank of Buford, Ga., and First Cherokee State Bank of Woodstock, Ga. So far this year, eight Georgia banks have failed.

Community & Southern Bank of Atlanta will assume the deposits of both banks. Georgia Trust had $117.4 million in deposits and $119.8 million in assets. Community & Southern has agreed to purchase $111.5 million of the two-branch bank's assets. That failure is expected to cost the FDIC's insurance fund $20.9 million.

Community & Southern also will assume First Cherokee's $193.3 million in deposits and purchase $222.7 million in assets. The failure of the three-branch bank is expected to cost the FDIC's insurance fund $36.9 million.

The Kansas Office of the State Bank Commissioner closed Leawood, Kan.-based Heartland Bank. Metcalf Bank of Lees Summit, Mo., agreed to assume all of the failed bank's deposits and purchase essentially all of its assets. Heartland had about $110.0 million in total assets and $102.6 million in total deposits. The failure is expected to cost the FDIC's insurance fund $3.1 million. It was Kansas's first bank failure this year.

Second Federal Savings and Loan Association of Chicago was closed by the Office of the Comptroller of the Currency, marking Chicago's fifth bank failure this year. Hinsdale, Ill.-based Hinsdale Bank & Trust Co. will take over the bank, agreeing to acquire all of the bank's deposits and to purchase about $14.2 million in assets. Second Federal had $199.1 million in total assets and $175.9 million in total deposits. The FDIC estimates that the cost of the bank's failure to its insurance fund will reach $76.9 million.

More than 450 U.S. banks have failed since the start of 2008 in the aftermath of the housing market's bust and ensuing financial crisis. Last year, there were 92 failures, down from the 157 banks that failed in 2010.

This year's pace of bank failures has slowed considerably from last year. At this point in 2011, 55 banks had failed.

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Banks closed in 4 states; 2012 tally hits 38 - MarketWatch