FDIC Friday Night Special: FirstBank of Georgia

The FDIC has closed another bank. This time it is FirstBank of Georgia. The bank only had $285 million in deposits, so this was no titan. Regional powerhouse Regions Financial has assumed the deposits, which is positive because last week we saw one case in which the FDIC could not find a buyer of the the failed institution’s deposits.

The FDIC press release is rather short and to the point. Obviously, they have had a lot of practice here.

FirstBank Financial Services, McDonough, Georgia, was closed today by the Georgia Department of Banking and Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Regions Bank, Birmingham, Alabama, to assume all of the deposits of FirstBank Financial Services.

FirstBank’s four offices will reopen on Monday as branches of Regions Bank. Depositors of FirstBank will automatically become depositors of Regions. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until Regions can fully integrate the deposit records of FirstBank.

Over the weekend, depositors of FirstBank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of December 31, 2008, FirstBank had total assets of approximately $337 million and total deposits of $279 million. In addition to assuming all of the failed bank’s deposits, including those from brokers, Regions agreed to purchase approximately $17 million in assets. The FDIC will retain the remaining assets for later disposition.

Customers who have questions about today’s transaction can call the FDIC toll free at 1-800-823-3215. The phone number will be operational this evening until 9:00 p.m., EST; on Saturday from 9:00 a.m. to 6:00 p.m., EST; Sunday from Noon to 6:00 p.m., EST; and thereafter from 8:00 a.m. to 8:00 p.m., EST. Interested parties can also visit the FDIC’s Web site at https://www.fdic.gov/bank/individual/failed/firstbank.html.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $111 million. Regions Bank’s acquisition of all deposits was the “least costly” resolution for the FDIC’s Deposit Insurance Fund compared to alternatives. FirstBank is the seventh bank to fail in the nation this year. The last bank to fail in Georgia was Haven Trust Bank, Duluth, on December 12, 2008.

Update 10:54PM EST: Another bank has been taken into FDIC protection – Alliance Bank of Culver City, CA. These bankruptcies are happening at a faster clip now. This one is a bit bigger with assets just over $1 Billion. California Bank and Trust of San Diego has taken the assets. Notable about this transaction is the loss sharing agreement between California Bank and the FDIC.

The FDIC and California Bank & Trust entered into a loss-share transaction. California Bank & Trust will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers as they will maintain a banking relationship.

See the press release below for more details.

Update 7 Feb 2009 1:50AM EST: There was a third bankruptcy, this one even larger (Assets of $1.7 billion). County Bank, also in Merced had all of its deposits ($1.3 billion) acquired by Westamerica. Given the problems in California real estate, I would expect many of the closed banks to be in California, with announcements coming late on Friday night.

See the press release below.

Regions Bank, Birmingham, AL, Acquires All the Deposits of FirstBank Financial Services, McDonough, GA – FDIC Press Release
California Bank and Trust, San Diego, CA, Acquires All of the Deposits of Alliance Bank, Culver City, CA – FDIC Press Release
Westamerica Bank, San Rafael, California, Acquires All the Deposits of County Bank, Merced, California – FDIC Press Release

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