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Feds shut bank in Georgia; 18 failures this year
WASHINGTON -- Regulators on Friday shut down FirstCity Bank in Georgia, marking the 18th failure this year of a federally insured bank. More are expected to succumb to the prolonged recession.
The Federal Deposit Insurance Corp. was appointed receiver of the failed bank, located in Stockbridge, Ga. It had about $297 million in assets and $278 million in deposits as of March 18.
The FDIC said it will mail checks to depositors of FirstCity Bank for their insured funds on Monday morning. Direct deposits from the federal government, such as Social Security and veterans' benefits payments, will be transferred to SunTrust Bank.
At the time of closing, FirstCity Bank had an estimated $778,000 in deposits that exceeded the insurance limits, the FDIC said. Regular deposit accounts are insured up to $250,000.
The FDIC estimates that the cost to the deposit insurance fund from the closing of FirstCity Bank will be about $100 million.
The last bank closing, two weeks ago, also involved a Georgia bank, Freedom Bank of Georgia in Commerce, Ga.
As the economy sours, unemployment rises, home prices tumble and loan defaults soar, bank failures have cascaded and sapped billions out of the deposit insurance fund. It now stands at its lowest level in nearly a quarter-century, $18.9 billion as of Dec. 31, compared with $52.4 billion at the end of 2007.
The FDIC expects that bank failures will cost the insurance fund around $65 billion through 2013.
The agency said Friday that the nation's banks and thrifts lost $32.1 billion in the final quarter of last year, even worse than the $26.2 billion originally reported last month. "Significant" revisions also lowered the industry's net income for all of 2008 to $10.2 billion from $16.1 billion.
Rising losses on loans and eroding values of assets bit into the revenue of U.S. banks and thrifts in late 2008, causing them to post the first quarterly deficit in 18 years.
The $26.2 billion loss originally reported for the October-December period already was the largest in 25 years of FDIC records. It compared with a $575 million profit in the fourth quarter of 2007.
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