Regulators on Friday closed FirstBank Financial Services in Georgia and two California banks, marking nine failures this year of federally insured institutions.
The Federal Deposit Insurance Corp. was appointed receiver of the three banks. FirstBank Financial, based in McDonough, Ga., had $337 million in assets and $279 million in deposits as of Dec. 31. Alliance Bank, based in Culver City, Calif., had about $1.14 billion in assets and $951 million in deposits as of year's end. Merced, Calif.-based County Bank had around $1.7 billion in assets and $1.3 billion in deposits as of Feb. 2.
Twenty-five U.S. banks failed last year, far more than in the previous five years combined. The six failures announced in the last two weeks are double the total for all of 2007.
The FDIC said FirstBank Financial's deposits will be assumed by Regions Bank in Birmingham, Ala. Its four branches will reopen Monday as offices of Regions Bank. Regions Bank also agreed to buy around $17 million of FirstBank's assets; the FDIC will retain the rest for eventual sale.
The parent company, Regions Financial Corp., is a large regional bank company that received $3.5 billion from the Treasury Department under the government's financial rescue program. In August, Regions Bank took over deposits and some assets of another failed institution, Integrity Bank of Alpharetta, Ga.
It's expected that many more banks won't survive this year amid the pressures of tumbling home prices, rising mortgage foreclosures and tighter credit. Some may have to merge with other institutions."As a strong national institution, we believe it is our responsibility to work with and support the FDIC in finding solutions for depositors in these challenging times," Dowd Ritter, the chairman, president and chief executive of Regions Financial Corp., said in a statement.
The FDIC estimated that the resolution of FirstBank Financial will cost the federal deposit insurance fund $111 million while that of Alliance Bank will cost $206 million and County Bank, $135 million.
Regular deposit accounts are insured up to $250,000.
Since October, the Treasury Department has been using most of the first half of the $700 billion federal bailout fund to buy stock in banks and other financial institutions, with the idea that cash injections will spur banks to get lending again.
More information for FirstBank customers is here.
(AP)
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