Regulators shut down banks in Florida, Minnesota; brings total failures to 66 this year

Regulators close banks in Florida, Minnesota

CHARLOTTE, N.C. — Regulators on Friday shut down banks in Florida and Minnesota, bringing the number of U.S. bank failures this year to 66.

The Federal Deposit Insurance Corp. took over The Bank of Bonifay, based in Bonifay, Fla., which had $242.9 million in assets and $230.2 million in deposits as of March 31.

The FDIC also seized Access Bank, in Champlin, Minn., with $32 million in assets and $32 million in deposits at the end of March.

First Federal Bank of Florida in Lake City, Fla. agreed to acquire Bonifay’s deposits and about $78.1 million of its assets. The FDIC will keep the remainder for eventual sale.

PrinsBank of Prinsburg, Minn. will assume Access’ deposits and assets.

The failure of The Bank of Bonifay is expected to cost the deposit insurance fund $78.7 million; that of Access Bank, $5.5 million.

With the 66 so far this year, the pace of bank closures this year is double that of 2009. By May 1 last year, U.S. regulators had shut down 32 banks.

There were 140 bank failures in the U.S. last year, the highest annual tally since 1992, at the height of the savings and loan crisis. They cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008 and only three succumbed in 2007.

The number of bank failures likely will peak this year and will be slightly higher than in 2009, FDIC Chairman Sheila Bair said recently.

As losses have mounted on loans made for commercial property and development, the growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, hitting a $20.9 billion deficit as of Dec. 31.

The number of banks on the FDIC’s confidential “problem” list jumped to 702 in the fourth quarter from 552 three months earlier, even as the industry squeezed out a small profit. Still, nearly one in every three banks reported a net loss for the latest quarter.

The FDIC expects the cost of resolving failed banks to grow to about $100 billion over the next four years.

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. Apart from the fund, the FDIC has about $66 billion in cash and securities available in reserve to cover losses at failed banks.