Tag Archives: Bank Failure

A federal grand jury in San Francisco has indicted two former bank executives of the now-defunct United Commercial Bank for using fraudulent accounting maneuvers to misrepresent loan losses to federal agencies as the bank took money from taxpayers through the Troubled Asset Relief Program (TARP). The Securities and Exchange Commission has filed separate civil charges accusing the same two executives and the former CEO of misleading investors about the bank's mounting loan losses, to the tune of $65 million.

The FDIC has launched a suit against 11 executives of former Georgia-based Alpha Bank & Trust hoping to recover $23.92 million in damages as a result of the bank's ""failure to use ordinary care and gross negligence."" The Georgia Department of Banking and Finance closed Alpha Bank & Trust in October 2008 after less than 30 months of operation, making it the fastest-failing bank between 1992 and 2008. The filing specifically targets 13 commercial loans, which the FDIC says borrowers had no ability to repay.

Banking regulators in the states of Minnesota and Missouri stepped in over the weekend to shut down community-based lenders in each of their respective states. These latest two closings bring the number of insured institutions on the FDIC's failed-bank list to 76 for the 2011 calendar year. The RiverBank in Wyoming, Minnesota, had been in operation for more than a century but the latest real estate downturn proved to be too much for the local community fixture. Security Bank in Ellington, Missouri, was also closed.

The Texas Department of Banking and the FDIC seized control of First International Bank in Plano, Texas, over the weekend. The closing is expected to cost the FDIC's insurance fund $53.8 million and brings the agency's failed-bank tally to 74 for the 2011 calendar year. The FDIC brokered a deal with Houston, Texas' American First National Bank to take over the failed institution and purchase essentially all of its assets.

State and federal regulators stepped in to close the doors on two community-based lenders over the weekend - one in California and one in Virginia pushing this year's failed bank tally to 73. Citizens Bank of Northern California was acquired by Tri Counties Bank out of Chico, California. Bank of the Commonwealth in Norfolk, Virginia was the larger of the two closings. It was picked up by North Carolina's Southern Bank and Trust Company.

The three major banks that received downgrades from Moody's this week responded with assertions of their value. Bank of America's and Wells Fargo's long-term credit ratings were downgraded, while Citigroup was hit with a downgrade of its short-term credit rating. Moody's says the downgrades stem from its belief the government is more likely now than during the financial crisis to allow a large bank to fail. The banks say that assessment is more a reflection on systemic support than their own liquidity profiles.

The Office of the Comptroller of the Currency (OCC) appointed the FDIC receiver of the First National Bank of Florida late Friday evening, making it the 71st FDIC-insured institution to go under this year. The OCC said it acted after finding that the bank ""had experienced substantial dissipation of assets and earnings due to unsafe or unsound practices."" CharterBank out of Georgia agreed to take over the failed bank's operations.

State and federal regulators on Friday closed the doors on two Georgia lenders, bringing the number of names on the FDIC's failed-bank list to 70 for the 2011 calendar year. The state of Georgia's banking industry has been especially hard-hit by the real estate and economic downturns. It's been home to the most bank failures since the crisis set in, with 19 institutional closings over the last eight-and-a-half months. Patriot Bank of Georgia in Cumming and CreekSide Bank in Woodstock are the latest casualties.

Bad real estate loans from the heyday of the boom have weighed heavy on banks' balance sheets, forcing 365 FDIC-insured institutions to close up shop over the last two-and-a-half years. The FDIC keeps a list of banks it considers to have a high-risk of failure. This so-called ""Problem List"" has declined for the first time since the third quarter of 2006. The number of ""problem"" institutions under the FDIC's watchful eye fell from 888 at the end of the first quarter to 865 at the end of the second.

This year's failed-bank tally has hit 68 with the closings of four more FDIC-insured lenders. The latest casualties can be found in Florida, Georgia, Illinois, and Pennsylvania, and collectively are expected to cost the FDIC an estimated $374.8 million. Lydian Private Bank, based out of Palm Beach, Florida, was the largest of the seizures in this latest round. It operated five branches, with $1.24 billion in deposits and $1.70 billion in assets.