Banks Fail in Florida, Washington as U.S. Closures Reach 129 for This Year
Lenders in Florida and Washington collapsed today, pushing the number of U.S. bank failures to 129 for the year, as financial firms suffer losses on loans tied to real estate.
Wakulla Bank, based in Crawfordville, Florida, was seized by a state regulator, according to a statement posted on the website of the Federal Deposit Insurance Corp., which was named receiver. Shoreline Bank, in Shoreline, Washington, was also closed, the FDIC said. The two actions drained $154.8 million from the FDIC deposit-insurance fund.
The agency’s list of “problem” banks climbed to 829 lenders with $403 billion in assets at the end of the second quarter, a 7 percent increase from the 775 on the list in the first quarter. The U.S. may lose about a third of its banks as the weakening economy weeds out the least healthy institutions, said John Kanas, chief executive officer of BankUnited.
The FDIC said it insured deposits at 7,830 financial institutions as of June 30. Banks are failing at a faster pace than last year, which saw the most failures since 1992, as real estate values remain depressed and economic recovery stays sluggish. Regulators closed 140 banks last year.
“Most of us in the business think we probably need 5,000 and think we are on our way to 5,000 as this cycle, if this is a cycle, unfolds,” Kanas, 63, said on Sept. 30 at the Bloomberg Dealmakers Summit in New York. “We simply chartered too many banks.”
Kanas became CEO of Miami Lakes, Florida-based BankUnited last year by joining a group of private equity investors who agreed to inject about $900 million into the collapsed Florida lender. The other investors include Carlyle Group, Centerbridge Capital Partners, WL Ross & Co., and Blackstone Group LP.
Home Bancshares Inc.’s Centennial Bank in Conway, Arkansas, acquired Wakulla’s 12 branches and $386.3 million in deposits, according to the FDIC statement.
Home Bancshares said the acquisition will immediately boost earnings and book value per share. Centennial Bank enters the Tallahassee, Florida, market with the deal, the company said in a statement. The FDIC will shares losses on more than $200 million of Wakulla’s loans, Home Bancshares said.
GBC International Bank, based in Los Angeles, assumed Shoreline Bank’s $100.2 million in deposits and will take over its three branches, the FDIC said.
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