WASHINGTON – Regulators on Friday shut down three banks in Puerto Rico, two in Missouri, and one each in Michigan and Washington, bringing the number of U.S. bank failures this year to 64.
The Federal Deposit Insurance Corp. took over the banks: Westernbank Puerto Rico, based in Mayaguez, with about $11.9 billion in assets; R-G Premier Bank of Puerto Rico, based in Hato Rey, with around $5.9 billion in assets; and San Juan-based Eurobank, with $2.5 billion in assets.
The FDIC also seized CF Bancorp, based in Port Huron, Mich., with about $1.6 billion in assets; Champion Bank, of Creve Coeur, Mo., with $187.3 million in assets; BC National Banks, of Butler, Mo., with $67.2 million in assets; and Frontier Bank, based in Everett, Wash., with $3.5 billion in assets.
Banco Popular de Puerto Rico agreed to acquire Westernbank's deposits and about $9.4 billion of its assets. The FDIC will keep the remainder for eventual sale. Scotiabank de Puerto Rico agreed to buy all the assets and deposits of R-G Premier Bank. And Oriental Bank and Trust is acquiring all the assets and deposits of Eurobank. The three healthier acquiring banks are based in San Juan, the Puerto Rican capital.
The three failed banks together held more than one-fifth of the total bank assets on the U.S. Caribbean territory. They had struggled to stay afloat during Puerto Rico's grinding, four-year recession.
It was Puerto Rico's largest bank consolidation in more than two decades as well as one of the FDIC's biggest resolutions of failed banks in the financial crisis that struck in fall 2008.
In addition, the FDIC and Banco Popular agreed to share losses on $8.8 billion of Westernbank's loans and other assets. The agency and Scotiabank agreed to share losses on $5.4 billion of R-G Premier Bank's assets, while the FDIC and Oriental Bank and Trust are to share losses on $1.6 billion of Eurobank's assets.
The failure of Westernbank is expected to cost the deposit insurance fund $3.3 billion; the failure of R-G Premier Bank is expected to cost $1.2 billion; that of Eurobank, $743.9 million.
First Michigan Bank, based in Troy, Mich., agreed to assume the deposits and about $870 million of the assets of CF Bancorp. BankLiberty, based in Liberty, Mo., agreed to acquire the deposits and $152.6 million of the assets of Champion Bank, while Community First Bank of Butler, Mo., is acquiring all the assets and deposits of BC National Banks. San Francisco-based Union Bank agreed to assume the assets and deposits of Frontier Bank.
In addition, the FDIC and First Michigan Bank agreed to share losses on $808.1 million of CF Bancorp's loans and other assets. The agency and BankLiberty agreed to share losses on $113.5 million of Champion Bank's assets, while the FDIC and Community First Bank are to share losses on $37.9 million of BC National Banks' assets. Union Bank is sharing losses with the government on about $3 billion of Frontier Bank's assets.
The failure of CF Bancorp is expected to cost the deposit insurance fund $615.3 million; the failure of Champion Bank is expected to cost $52.7 million; that of BC National Banks, $11.4 million and that of Frontier Bank, around $1.4 billion.
There were 140 bank failures in the U.S. last year, the highest annual tally since 1992, at the height of the savings and loan crisis. They cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008 and only three succumbed in 2007.
The number of bank failures likely will peak this year and will be slightly higher than in 2009, FDIC Chairman Sheila Bair said recently.
As losses have mounted on loans made for commercial property and development, the growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, hitting a $20.9 billion deficit as of Dec. 31.
The number of banks on the FDIC's confidential "problem" list jumped to 702 in the fourth quarter from 552 three months earlier, even as the industry squeezed out a small profit. Still, nearly one in every three banks reported a net loss for the latest quarter.
The FDIC expects the cost of resolving failed banks to grow to about $100 billion over the next four years.
The agency mandated last year that banks prepay about $45 billion in premiums, for 2010 through 2012, to replenish the insurance fund.
Depositors' money — insured up to $250,000 per account — is not at risk, with the FDIC backed by the government. Apart from the fund, the FDIC has about $66 billion in cash and securities available in reserve to cover losses at failed banks.