Money Matters - Simplified

FDIC shutter three banks, failure tally hits 31

All three failed banks have been acquired by larger banks under loss coverage agreements.

The Federal Deposit Insurance Corp (FDIC) shuttered three banks in the US, one each in Florida, Georgia and Tennessee on Friday.

The closures brought the total number of bank failures this year to 31.

The state of Georgia has had the most bank failures in 2012. With another shut down, the total number of seizures in Georgia this year mounts to five.

Close on the heels is Florida with four bank failures this year.

Closure of banks has slowly petered off after it gathered momentum during the financial crisis in 2008.

At this time last year, there had been 47 bank failures while 83 had failed in 2010.

With yesterday’s seizures the total cost to the Deposit Insurance Fund from the three banks will be $100 million.

The banks seized
Banking regulators seized the Putnam State Bank in Palatka, Fla., Security Exchange Bank, in Marietta, Ga., and The Farmers Bank of Lynchburg, in Lynchburg, Tenn.

All the three banks shuttered are small. Putnam State Bank was the largest with total assets of about $169.5 million and $160 million in deposits as of March 31.

Security Exchange Bank in Georgia had $151.0 million in assets and The Farmers Bank of Lynchburg in Tennessee had $163.9 million in assets.

With yesterday’s seizures the total cost to the Deposit Insurance Fund from the three banks will be $100 million.

Larger banks acquire failed banks
All three failed banks have been acquired by larger banks under loss coverage agreements.

Based in Indiantown, Harbor Community Bank has taken over the Putnam State Bank with its three branches. In addition to assuming the deposits of the failed bank, Harbor Community Bank has agreed to purchase all of its assets.

"We are very excited about the opportunity and expansion into a new market," said Harbor Community President Hal Roberts.

Fidelity Bank of Atlanta took charge of Security Exchange Bank in Marietta, Georgia. According to FDIC, the failed bank's two branches are scheduled to reopen Monday as Fidelity Bank branches.

The four branches of the Farmers Bank of Lynchburg have been taken over by the banner of Clayton Bank and Trust, based in Knoxville, Tenn., which agreed to assume the failed bank’s deposits and a major chunk of its assets.