Regulators shut down three more banks Friday, bringing the total number of bank failures this year in the U.S. to 32. That compares with 25 in all of last year and three in 2007.
Regulators shut down Silverton Bank in Georgia on Friday and set up a temporary government-controlled bank until a buyer can be found. Silverton, which operated as a sort of wholesale bank, fell victim to large losses on real estate construction and development loans, regulators said.
The federal Office of the Comptroller of the Currency closed Silverton Bank, based in Atlanta, and appointed the Federal Deposit Insurance Corp. as receiver. Silverton Bank had about $4.1 billion in assets and $3.3 billion in deposits as of May 1.
Also closed Friday was Citizens Community Bank in Ridgewood, N.J., and America West Bank in Layton, Utah.
Citizens Community Bank had roughly $45.1 million in assets and $43.7 million in deposits as of Dec. 31. Its deposits are being assumed by North Jersey Community Bank in Englewood Cliffs, and its sole office will reopen on Monday as a branch of that bank.
America West Bank had total assets of about $299.4 million and total deposits of $284.1 million. Logan, Utah-based Cache Valley Bank agreed to assume all of the deposits of the failed bank at a discount of $352,000. The three branches of America West will reopen on Monday as branches of Cache Valley Bank.
The FDIC estimated that the cost to the deposit insurance fund from Silverton Bank's failure will be $1.3 billion — the fourth-largest such loss since the financial crisis began felling banks last year.
The combined cost of the closings of Citizens Community Bank and America West Bank is an estimated $137.5 million.
The regulators have been shuttering failed banks and arranging the sale of their deposits and assets to other financial institutions. In the case of Silverton, however, a buyer couldn't be found, and the FDIC took the less usual step of creating a so-called "bridge bank." Agency officials said they expected it may continue in operation for around 60 to 90 days, though by law that could be extended for several years.
Silverton was a type of institution known as a correspondent bank and did not take deposits directly from the public or make loans to consumers. It provided services to around 1,400 client banks, such as credit-card operations, investments and loan purchases.
The FDIC said no "meaningful impact" on the client banks is expected from the creation of the new temporary bank, to be called Silverton Bridge Bank. The agency retained an institution named TIB-The Independent BankersBank, based in Irving, Texas, under contract to operate the new bank.
Around 400 institutions, mostly community banks, own stock in Silverton's holding company, Silverton Financial Services, and they will take investment losses as a result.
Silverton had been one of about 20 so-called "bankers' banks" nationwide. They don't normally engage in lending for construction and development, FDIC officials said. But Silverton changed to a status as a commercial bank within the category, switching from being a state-chartered institution to one under Treasury Department supervision — allowing it to branch into those lending activities.