Regulators shut banks in Georgia, N.J., Utah; 32 bank failures in 2009

ByABC News
May 2, 2009, 9:25 AM

WASHINGTON -- 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.