In yesterday’s post, I mentioned of the trend of banks going under and being taken over by either the FDIC or bought by larger banks. The FDIC took over two more banks yesterday. They warn that more banks will become insolvent and the cycle will continue. No one really has any idea when the economy will stabilize and some people are panicking about losing their money if left in the bank.

MSNBC.com

FDIC takes over two more failed banks

28 branches scheduled to reopen Monday as Mutual of Omaha Bank

The Associated Press

updated 11:51 a.m. ET, Sat., July. 26, 2008

CARSON CITY, Nev. - U.S. regulators took over two banks on Friday and sold them to Mutual of Omaha Bank, the sixth and seventh bank failures this year as financial institutions struggle with a housing bust and credit crunch.

Two weeks after the Federal Deposit Insurance Corp seized IndyMac Bancorp Inc., the Office of the Comptroller of the Currency said it closed First National Bank of Nevada and First Heritage Bank NA of California.

First National, characterized as undercapitalized, had total assets of $3.4 billion and $3 billion in deposits. First Heritage, described as critically undercapitalized, had assets of $254 million and $233 million in deposits, regulators said.

Bill Uffelman of the Nevada Bankers Association said Friday the FDIC action “is a reflection of the times for the banks. It’s a poor economy.”

Uffelman cautioned against the sort of consumer concern that prompted many customers of IndyMac Bank branches to wait for hours in line to withdraw funds across Southern California last week after that bank was seized by federal regulators. All FDIC-insured bank deposits are guaranteed by the FDIC up to $100,000, he noted.

Nevada Gov. Jim Gibbons said the bank takeover will be closely monitored in Nevada “to ensure there’s minimal disruption to business and that employees’ jobs are protected as much as possible.”

The FDIC said the cost of the transactions to its insurance fund is estimated to be $862 million, adding that the two failed banks represent just 0.3 percent of $13.4 trillion in total industry assets at about 8,500 FDIC-insured institutions.

The FDIC said the 28 offices of the two banks will reopen on Monday as Mutual of Omaha Bank. Over the weekend, customers can access their money by writing checks, using automatic teller machines or debit cards.

Mutual of Omaha Bank currently has more than $750 million in assets and operates 14 retail branches in Nebraska and Colorado with commercial lending offices in Dallas and Des Moines, Iowa, the FDIC said.

It is a subsidiary of Mutual of Omaha, a 99-year-old insurance and financial services company with more than $19 billion in total assets.

Warnings of more failures

Top banking regulators have warned of additional insolvencies this year and next, but for now do not expect failures the size of IndyMac, which had $32 billion in assets and $19 billion in total deposits at the end of March.

IndyMac, the third largest U.S. bank failure, was regulated by the Office of Thrift Supervision and is expected to deplete the FDIC’s insurance fund by between $4 billion and $8 billion.

IndyMac is being run by the FDIC while the agency looks to sell its assets.

The FDIC oversees an industry-funded reserve of about $53 billion used to insure up to $100,000 per deposit and $250,000 per individual retirement account at insured banks.

The agency also has a running tally of problem banks that its examiners closely monitor. At the end of the first quarter, 90 institutions were on the list that is expected to be updated next month.

First Heritage of Newport Beach, California, had three branches with customers comprised mostly of corporations, while First National of Reno, Nevada, had 25 branches. Both were owned by First National Bank Holding Co of Scottsdale, Arizona.

In addition to assuming all the deposits, Mutual of Omaha Bank will purchase about $200 million of assets and pay the FDIC a 4.41 premium to assume the deposits.

None of the entities are publicly traded.

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More news of failed banks and what the federal government is doing to help:

First Priority Becomes Eighth Failed Bank; SunTrust Buys Assets - 2 (Bloomberg) — First Priority Bank with six branches on Florida’s Gulf Coast was closed by state regulators, becoming the eighth US bank to collapse this year amid failed loans and writedowns linked to a slump in home prices. … FDIC Creates New Online Tool for Customers of Failed Banks - This service is only available for banks that failed after July 1, 2008. The customer must enter each account number to determine that account’s status. If you have multiple accounts with the failed bank, please enter each account … When the Feds Come Marching In - This is generally good news for the shareholders of the acquiring bank and bad news for the shareholders (and management) of the failed bank. Over the past weekend, two banks operating in the western United States, First National Bank … Today the Banking Crisis Hit Home in Florida…..the FDIC usually … - The six branches of First Priority will reopen on Monday as branches of SunTrust Bank. Depositors of the failed bank will automatically become depositors of SunTrust. Deposits will continue to be insured by the FDIC, so there is no need … FDIC Takes Over Two More Failed Banks - The FDIC said the takeover of the failed banks was the least costly resolution and all depositors - including those with funds in excess of FDIC insurance limits - will switch to Mutual of Omaha with “the full amount of their deposits.” … Do you realize how many Banks in the US have failed since 2000? - The FDIC is often appointed as receiver for failed banks. This page contains useful information for the customers and vendors of these banks. This includes information on the acquiring bank (if applicable), how your accounts and loans …

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