WASHINGTON – Regulators on Friday closed banks in North Carolina, South Carolina, Georgia and Colorado, bringing to seven the number of closures in 2011 following last year’s toll of 157 bank failures amid the limping economy and mounting bad loans.
The Federal Deposit Insurance Corp. took over the banks, the largest by far being United Western Bank, based in Denver, with $2.05 billion in assets.
First-Citizens Bank & Trust Co., based in Raleigh, N.C., agreed to acquire the assets and deposits of United Western Bank. In addition, the FDIC and First-Citizens Bank & Trust agreed to share losses on $1.1 billion of United Western Bank’s loans and other assets.
The failure of United Western Bank is expected to cost the deposit insurance fund $312.8 million.
The bank’s holding company, United Western Bancorp Inc., said the seizure was overly hasty and was done just when the bank was close to raising $200 million in capital. Denver-based United Western Bancorp also said it may have to seek bankruptcy protection for itself and some subsidiaries to protect the value of its remaining assets.
As of Friday, the company said in a news release, it had commitments for $149 million in investments and had received “strong indications of interest” of more than $70 million.
“We were making steady progress with regard to completing our capital formation efforts, and were within sight of the completion of our $200 million raise,” Guy Gibson, chairman of United Western Bancorp, said in a statement. “This precipitous action by the (Office of Thrift Supervision) and the FDIC will ultimately cause an unnecessary loss to the deposit insurance fund, since our private market solution was near at hand.”
United Western Bank was closed by the federal Office of Thrift Supervision, which deemed it to be undercapitalized “and in an unsafe and unsound condition to transact business.” The Treasury Department agency appointed the FDIC as receiver of the bank.
OTS spokesmen couldn’t be reached for comment Friday night. An FDIC spokesman, Greg Hernandez, noted that the decision to close the bank was made by the thrift agency and therefore the FDIC wouldn’t comment on it.
Also seized Friday by the FDIC were Bank of Asheville, based in Asheville, N.C., with $195.1 million in assets, CommunitySouth Bank and Trust, based in Easley, S.C., with $440.6 million in assets, and Enterprise Banking Co. of McDonough, Ga., with $100.9 million in assets.
First Bank, based in Troy, N.C., agreed to assume the assets and deposits of Bank of Asheville. CertusBank, also based in Easley, is assuming the assets and deposits of CommunitySouth Bank and Trust. The FDIC was unable to find a buyer for Enterprise Banking Co., and it approved the payout of the bank’s insured deposits.
The FDIC and First Bank agreed to share losses on $166.3 million of Bank of Asheville’s assets. The agency and CertusBank are sharing losses on $211.3 million of the assets of CommunitySouth Bank and Trust.
The failure of Bank of Asheville is expected to cost the deposit insurance fund $56.2 million; that of CommunitySouth Bank and Trust, $46.3 million; and Enterprise Banking Co., $39.6 million.
The 157 bank closures nationwide last year topped the 140 shuttered in 2009. It was the most in a year since the savings-and-loan crisis two decades ago.
The 2009 failures cost the insurance fund about $36 billion. The failures last year cost around $21 billion, a lower price tag because the banks that failed in 2010 were on average smaller. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three succumbed in 2007.
The growing number of bank failures has sapped billions of dollars out of the deposit insurance fund. It fell into the red in 2009, and its deficit stood at $8 billion as of Sept. 30.
The number of banks on the FDIC’s confidential “problem” list rose to 860 in the third quarter of last year from 829 three months earlier. The 860 troubled banks is the highest number since 1993, during the savings-and-loan crisis.
The FDIC expects the cost of resolving failed banks to total around $52 billion from 2010 through 2014.
Depositors’ money — insured up to $250,000 per account — is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted in July.