Regulators shut small banks in Florida, Washington to bring US
bank failures this year to 127

Regulators on Friday shut down small banks in Florida and
Washington state, bringing to 127 the number of U.S. bank failures
this year on a wave of loan defaults and economic distress.
The Federal Deposit Insurance Corp. took over Haven Trust Bank
Florida of Ponte Vedra Beach, Fla., with $148.6 million in assets
and $133.6 million in deposits, and North County Bank, based in
Arlington, Wash., with $288.8 million in assets and $276.1 million
in deposits.
First Southern Bank, based in Boca Raton, Fla., agreed to assume
the assets and deposits of Haven Trust Bank Florida. In addition,
the FDIC and First Southern Bank agreed to share losses on $127.3
million of Haven Trust Bank Florida's loans and other assets.
Whidbey Island Bank, based in Coupeville, Wash., is acquiring the
assets and deposits of North County Bank. The FDIC and Whidbey
Island Bank agreed to share losses on $221.9 million of North
County Bank's assets.
The failure of North County Bank is expected to cost the deposit
insurance fund $72.8 million.
The failure of Haven Trust Bank Florida is expected to cost the
fund $31.9 million. It was the 24th bank in Florida to fail this
year.
Florida is among the hardest hit states for bank collapses, as the
meltdown in the real estate market brought an avalanche of soured
mortgage loans. Also high on the list of failure-heavy states are
California, Georgia and Illinois.
With 127 closures nationwide so far this year, the pace of bank
failures exceeds that of 2009, which was already a brisk year for
shutdowns. By this time last year, regulators had closed 95
banks.
The pace has accelerated as banks' losses mount on loans made for
commercial property and development. Many companies have shut down
in the recession, vacating shopping malls and office buildings
financed by the loans. That has brought delinquent loan payments
and defaults by commercial developers.
The number of bank failures is expected to peak this year and be
slightly higher than the 140 that fell in 2009. That was the
highest annual tally since 1992, at the height of the savings and
loan crisis. The 2009 failures cost the insurance fund more than
$30 billion. Twenty-five banks failed in 2008, the year the
financial crisis struck with force; only three succumbed in
2007.
The growing bank failures have sapped billions of dollars out of
the deposit insurance fund. It fell into the red last year, and its
deficit stood at $20.7 billion as of June 30.
The number of banks on the FDIC's confidential "problem" list
jumped to 829 in the second quarter from 775 three months earlier,
even as the industry as a whole had its best quarter since 2007,
making $21.6 billion in net income. Banks with more than $10
billion in assets -- only 1.3 percent of the industry -- accounted
for $19.9 billion of the total earnings.
The FDIC expects the cost of resolving failed banks to total around
$60 billion from 2010 through 2014.
The agency mandated last year that banks prepay about $45 billion
in premiums, for 2010 through 2012, to replenish the insurance
fund.
Depositors' money -- insured up to $250,000 per account -- is not
at risk, with the FDIC backed by the government. That insurance cap
was made permanent in the financial overhaul law enacted in
July.
Written by: Marcy Gordon, AP Business Writer
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