Saturday, February 14, 2009

Friday evening at the FDIC - four more bank failures

It was a busy week at the FDIC. Friday evening the FDIC announced four more bank failures:

  1. Sherman County Bank, Loup City, Nebraska. Heritage Bank, Wood River, Nebraska, assumed all of the deposits.
  2. Riverside Bank of the Gulf Coast, Cape Coral, Florida. TIB Bank, Naples, Florida, assumed all of the deposits.
  3. Corn Belt Bank and Trust Company, Pittsfield, Illinois. The Carlinville National Bank, Carlinville, Illinois, assumed all of the deposits.
  4. Pinnacle Bank, Beaverton, Oregon. Washington Trust Bank, Spokane, Washington, assumed all of the deposits.

That brings to 13 the number of failed banks in 2009.

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

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