Three More Banks Fail; 32 So Far 2009

Three more banks were closed by banking regulators on Friday, May 1, bringing the total number of failed banks so far in 2009 to 32.

The largest of the three to fail was Silverton Bank N.A., of Atlanta, GA. It has $4.1 billion in assets and $3.3 billion in deposits. The Office of the Comptroller of the Currency closed the bank and made the FDIC receiver. The FDIC created a bridge bank to take over operations; the newly created bank is Silverton Bridge Bank, N.A. The failed bank didn't take deposits directly from the general public, nor did it make loans to consumers. It was a commercial bank that provided correspondent banking services to its client banks. It had 1,400 client banks in 44 states, and operated six regional offices.

The FDIC contracted with the Independent BankersBank, Irving, TX to provide operational management of the Silverton Bridge Bank, N.A. This will allow preexisting marketing efforts for the bank to continue. It is the sixth bank in Georgia to fail this year. The last Georgia bank to fail was American Southern Bank on April 24.

The Citizens Community Bank, Ridgewood, NJ was closed by the New Jersey Department of Banking and Insurance. The FDIC was appointed receiver on Friday. The FDIC arranged for North Jersey Community Bank to buy all deposits of the failed bank of $43.7 million. The failed bank had assets of $45.1 million. North Jersey Community Bank paid a premium of 0.67 percent to buy the deposits and will also buy $11.5 million of the failed bank's assets. The failed bank's single office will become a branch of North Jersey Community Bank.

The cost to the FDIC Deposit Insurance Fund will be $18.1 million. The last bank to fail in New Jersey was Dollar Savings Bank, Newark, on February 14, 2004.

The last bank to fail on Friday was America West Bank of Layton, UT. It was closed by the Utah Department of Financial Institutions, and the FDIC was appointed receiver. The FDIC arranged for the deposits of the failed bank to be bought by Cache Valley Bank, Logan, UT.

The failed bank's three offices are now branches of Cache Valley Bank. The failed bank had assets of $200.4 million and deposits of $284.1 million. Cache Valley Bank paid a discount of $352,000 to acquire the deposits. It also agreed to buy $10.9 million in assets with a 30-day option to purchase loans at book value. The cost to the FDIC Deposit Insurance Fund will be $119.4 million. The last bank to fail in Utah was MagnetBank, Salt Lake City, on January 20, 2009.

About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.

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