U.S. Bank Failures Rise to 72 With Collapses in Florida, Oregon

By Alison Vekshin and Ari Levy

Aug. 8 (Bloomberg) -- U.S. bank failures rose to 72 this year with the collapse of two lenders in Florida and one in Oregon amid the worst economic slump since the Great Depression.

Regulators shut First State Bank and Community National Bank, both based in Sarasota, Florida, and Community First Bank in Prineville, Oregon, the Federal Deposit Insurance Corp. said in statements yesterday. The FDIC was named receiver. Closing the lenders, with combined assets of $769 million and deposits of $662 million, will cost the deposit insurance fund about $185 million.

Regulators are closing banks at the fastest pace in 17 years as losses mount from unpaid real-estate debt. The FDIC is offering to share losses with potential buyers, reviving a practice used during the U.S. savings-and-loan crisis in the late 1980s.

Stearns Bank of St. Cloud, Minnesota, will assume almost all deposits of the Florida banks, the FDIC said. First State, the biggest of the three failures with $463 million in assets and $387 million in deposits, had nine branches along Florida’s Gulf coast that will open Aug. 10 as Stearns branches, according to the FDIC.

Community National’s four offices will open under the Stearns name, the agency said. Stearns is paying a 0.25 percent premium for Community National’s $93 million in deposits and the FDIC is sharing losses on most of the $545 million assets being acquired from the two failed lenders.

Home Federal Bank in Nampa, Idaho, is buying most of Community First’s $182 million in deposits and 94 percent of its $209 million in assets. The FDIC is sharing losses on $155 million of assets in the deal. The eight branches of Community First will reopen on Aug. 10 as offices of Home Federal.

The FDIC, based in Washington, insures deposits at more than 8,200 institutions with $13.5 trillion in assets and reimburses customers for deposits of up to $250,000 when a bank fails. This year’s failures have cost the insurance fund more than $15 billion.

To contact the reporters on this story: Alison Vekshin in Washington at avekshin@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net.

Last Updated: August 8, 2009 00:00 EDT