FDIC shutters 3 banks in 3 states

WASHINGTON (AP) — Federal regulators have seized 3 banks, one each in Florida, Georgia and Tennessee, bringing to 31 the number of U.S. banks that have failed so far this year.

The Federal Deposit Insurance Corp. said Friday that it closed Putnam State Bank in Palatka, Fla., Security Exchange Bank, in Marietta, Ga., and The Farmers Bank of Lynchburg, in Lynchburg, Tenn.

The FDIC lined up other lenders to assume the deposits and assets of each of the banks.

Regulators estimate that the failure of the three banks will cost the insurance fund $100 million.

Putnam State Bank, which had three branches, had about $169.5 million in assets and $160 million in deposits as of March 31.

Harbor Community Bank, in Indiantown, Fla., agreed to assume all of Putnam's deposits and to buy essentially all its assets. Regulators and Harbor Community Bank entered into a loss-share transaction on $112.3 million of Putnam State Bank's assets.

Fidelity Bank, based in Atlanta, agreed to assume Security Exchange Bank's assets and essentially all of its deposits, the FDIC said.

As of March 31, Security Exchange Bank had $147.9 million in deposits and $151 million in assets. Its two branches will reopen on Monday as Fidelity Bank locations.

The FDIC said it entered into a loss-share transaction with Fidelity Bank on $102.8 million of Security Exchange Bank's assets.

The Farmers Bank of Lynchburg's four branches will reopen under the banner of Clayton Bank and Trust, based in Knoxville, Tenn., which agreed to assume all of Farmers Bank's deposits and the bulk of its assets.

Farmers Bank had about $163.9 million in assets and $156.4 million in deposits as of March 31.

Clayton Bank and Trust agreed to pay the FDIC a 0.10 percent premium for Farmers Bank's deposits, regulators said.

The pace of bank closures has slowed sharply after ballooning as the financial crisis took hold in 2008. By this time last year, 45 banks had failed.

In 2010, regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. Those failures cost the deposit insurance fund around $23 billion. The FDIC has said 2010 likely was the high-water mark for bank failures from the Great Recession. Last year's 92 failures cost an estimated $7.9 billion.

In 2009, there were 140 bank failures that cost the insurance fund about $36 billion, more than it paid out the following year because the banks involved in 2009 were bigger on average. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three were closed in 2007.

From 2008 through 2011, bank failures cost the fund an estimated $88 billion. The FDIC expects failures from 2012 through 2016 to cost $12 billion.

The deposit insurance fund fell into the red in 2009. With failures slowing, the fund's balance turned positive in the second quarter of last year.

By Dec. 31, it stood at $11.8 billion, about 50 percent higher than three months earlier, according to the FDIC.

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