Friday evening at the FDIC - third bank failure of 2009 - 1st Centennial Bank, Redlands, CA

Friday evening the FDIC took control of one failed bank. For the third bank failure of 2009, the FDIC arranged for First California Bank, Westlake Village, CA to assume only the insured deposits of 1st Centennial Bank, Redlands, CA. Alas,  there were approximately $12.8 million in uninsured (excess) deposits held at 1st Centennial that potentially exceeded the insurance limits, out of total deposits of $676.9 million. First California paid a 5.29% premium for the insured deposits.

The FDIC does not give any advance notice of bank closures. In fact, it is usually a state banking regulator who does the closure and then FDIC is "named receiver" and then takes over and promptly arranges to sell as much deposits and assets as it can to a healthier bank.

The basic idea is to totally avoid old-fashioned "runs" on banks and pre-arrange the assumption of deposits by a healthy bank before the closure is even announced. In other words, there should be no disruption of service and no need for customers to lose any sleep.

-- Jack Krupansky