Sept. 8: This post has been corrected.
Five banks failed Friday, bringing this year’s total to 89.
Here is our complete list of all failed banks this year.
The five banks all had under $500 million in assets (which typically for community banks are mostly loans): tiny First Bank of Kansas City ($16 million in assets), First State Bank, located in Flagstaff, Ariz. ($105 million in assets), Platinum Community Bank, located in Rolling Meadows, Ill. ($345.6 million in assets), InBank, located in Oak Forest, Ill. ($212 million in assets), and Vantus Bank, the biggest of the lot, located in Sioux City, Iowa ($458 million in assets).
Great American Bank of De Soto, Kan., agreed to assume First Bank's deposits, Sunwest Bank of Tustin, Calif., agreed to assume First State Bank's, MB Financial Bank of Chicago agreed to assume InBank's, and Great Southern Bank of Springfield, Mo., agreed to assume Vantus Bank's. There was no taker for Platinum Community Bank, though, and the FDIC said it will begin paying out its insured deposits (under $250,000) to depositors.
The total cost to the FDIC for these five failures is forecast to be $401.3 million. See our post last week for an update on the low level of the FDIC's insurance fund.
For Great Southern Bank's acquisition of Vantus Bank, the FDIC agreed to a loss-share agreement for about $338 million of the failed bank's assets. The FDIC strikes these deals only for a portion of the failures in order to sweeten the deal for the acquiring bank. The deals keep the loans in the private sector, as opposed to the FDIC taking them and auctioning them off later. As a result, the FDIC says, the deals will ultimately cost the agency less. The Wall Street Journal reported earlier this week that the FDIC has so far agreed to assume most of the risk on $80 billion in assets through its more than 50 loss-share agreements and that "the agency expects it will eventually have to cover $14 billion in future losses on deals cut so far."
Correction: This post incorrectly stated that First State Bank is located in Flagstar, Ariz. It is located in Flagstaff, Ariz.
