The FDIC was rested up after the Thanksgiving holiday. Six banks were added to the FDIC Failed Bank List today:
Greater Atlantic Bank, Reston, VA - Total deposits of approximately $179.0 million and an estimated cost to the Deposit Insurance Fund (DIF) of $35 million. Unfortunately, this involved one of those pesky loss-share agreements between the FDIC and Sonabank on $145.0 million of the assets.
Benchmark Bank, Aurora, IL - Total deposits of approximately $181.0 million and an estimated hit to the DIF of $64 million. This too required a loss-share agreement, between the FDIC and MB Financial Bank, N.A., on approximately $139.0 million of Benchmark Bank’s assets.
AmTrust Bank, Cleveland, OH - Total deposits of approximately $8.0 billion and an estimated hit to the DIF of $2.0 billion. The FDIC and New York Community Bank entered into a loss-share transaction on approximately $6.0 billion of AmTrust Bank’s assets.
Tattnall Bank, Reidsville, GA - Total deposits of approximately $47.3 million and an estimated hit to the DIF of $13.9 million. Fortunately, this didn’t involve a loss-share agreement, so that estimate is probably quite good.
First Security National Bank, Norcross, GA - Total deposits of approximately $123.0 million and an estimated hit to the DIF of $30.1 million. The FDIC and State Bank and Trust Company entered into a loss-share transaction on approximately $82.4 million of First Security National Bank’s assets.
The Buckhead Community Bank, Atlanta, GA - Total deposits of approximately $838.0 million and an estimated hit to the DIF of $241.4 million. The FDIC and State Bank and Trust Company entered into a loss-share transaction on approximately $692 million of The Buckhead Community Bank’s assets (must have been a BOGO-deal).
Buckhead Community Bank had different names for their branches, so here’s a bit from the press release:
The Buckhead Community Bank and its six branches in Georgia operating under the following names: The Sandy Springs Community Bank, The Midtown Community Bank, The Alpharetta Community Bank, The Cobb Community Bank, The Forsyth Community Bank, and The Hall Community Bank, will reopen during normal business hours as branches of State Bank and Trust Company. Depositors of The Buckhead Community Bank will automatically become depositors of State Bank and Trust Company. 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 branches until State Bank and Trust Company can fully integrate the deposit records of The Buckhead Community Bank.
This brings the tally of failed banks this year up to 130. There’s one big one on today’s list, and most loss estimates will likely prove optimistic because of the loss-share agreements. After posting this on the IndyMac practices (motivations not to perform mortgage modifications), I looked more into the FDIC’s current practices. I even found a report on their current accounting practices for the DIF. Things have changed. The way the FDIC is handling their books in this crisis, particularly with respect to these loss-share agreements, gives me very little hope. The banks are failing largely because of poor accounting practices, and the banking regulators are using similar accounting practices. Insufficient loss reserves, optimistic future cash-flow estimates, and ridiculous valuations of assets are the very core of the problem, yet the regulators are just as guilty as the regulated at making these accounting errors. While such trickery may be standard practice for the Fed, the FDIC used to behave better.
