Regulators close small Florida, Wash. banks

WASHINGTON (AP) -- Regulators shut down small banks in Florida and Washington state on Friday, lifting to 129 the number of U.S. bank failures this year as loan defaults have mounted and economic distress has lingered.

The Federal Deposit Insurance Corp. took over Wakulla Bank, based in Crawfordville, Fla., with $424.1 million in assets and $386.3 million in deposits, and Shoreline Bank in Shoreline, Wash., with $104.2 million in assets and $100.2 million in deposits.

Centennial Bank, based in Conway, Ark., agreed to assume the assets and deposits of Wakulla Bank. GBC International Bank, based in Los Angeles, agreed to acquire the deposits and $65.7 million of the assets of Shoreline Bank. The FDIC will keep the remainder of the assets for eventual sale.

In addition, the FDIC and Centennial Bank agreed to share losses on $212.7 million of Wakulla Bank's loans and other assets. The FDIC and GBC International Bank agreed to share losses on $49.2 million of Shoreline Bank's assets.

The failure of Wakulla Bank is expected to cost the deposit insurance fund $113.4 million; that of Shoreline Bank is expected to cost the fund $41.4 million.

Wakulla Bank was the 25th bank in Florida to fail this year. Florida is among the states hardest hit by bank collapses, stemming from the meltdown in the real estate market that brought an avalanche of soured mortgage loans. Other states with many failed banks are California, Georgia and Illinois.

The 129 closures nationwide this year exceeds that of 2009, a brisk year for shutdowns with 140. By this time last year, regulators had closed 98 banks.

The pace has accelerated as banks' losses mount on loans made for commercial property and development. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans. That has brought delinquent loan payments and defaults by commercial developers.

The 2009 total of bank failures was the highest annual tally since 1992, at the height of the savings and loan crisis. The 2009 failures cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three succumbed in 2007.

The growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, and its deficit stood at $20.7 billion as of June 30.

The number of banks on the FDIC's confidential "problem" list jumped to 829 in the second quarter from 775 three months earlier, even as the industry as a whole had its best quarter since 2007, making $21.6 billion in net income. Banks with more than $10 billion in assets -- only 1.3 percent of the industry -- accounted for $19.9 billion of the total earnings.

The FDIC expects the cost of resolving failed banks to total around $60 billion from 2010 through 2014.

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. That insurance cap was made permanent in the financial overhaul law enacted in July.

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