Archive for August, 2009

Three more banks were shut down by the FDIC on Friday evening, two of which were taken over by other banks. None were in Washington. We are now up to 77 bank closures this year. Here are the details:

No. 75: Union Bank of Gilbert, Ariz. was closed by the FDIC and taken over by MidFirst Bank of Oklahoma City, Okla. Cost to the FDIC: $61 million.

No. 76: Community Bank of Arizona in Phoeniz was closed, then taken over by MidFirst Bank of Oklahoma City. Cost to the FDIC: $25.5 million.

No. 77: Community Bank of Nevada in Las Vegas was completely shut down, with no other bank taking over. Cost to the FDIC: $781.5 million.

What’s been rumored took place today: Colonial Bank was shut down by the FDIC and then taken over by Bank Branching and Trust of Winston-Salem, N.C. This could be a big deal in the industry because it was heavily involved in real estate development lending. Here is the FDIC press release:

Colonial Bank, Montgomery, Alabama, was closed today by the Alabama State Banking Department, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Branch Banking and Trust (BB&T), Winston-Salem, North Carolina, to assume all of the deposits of Colonial Bank.

Colonial Bank’s 346 branches in Alabama, Florida, Georgia, Nevada and Texas will reopen under normal business hours beginning tomorrow and operate as branches of BB&T. Depositors of Colonial Bank will automatically become depositors of BB&T. 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 should continue to use their existing branches until BB&T can fully integrate the deposit records of Colonial Bank.

This evening and over the weekend, depositors of Colonial Bank 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.

“The past 18 months have been a very trying period in the financial services arena, but the FDIC and its staff have performed as Congress envisioned when it created the corporation more than 75 years ago,” said FDIC Chairman Sheila C. Bair. “Today, after protecting almost $300 billion in deposits since the current financial crisis began, the FDIC’s guarantee is as certain as ever. Our industry funded reserves have covered all losses to date. In fact, losses from today’s failures are lower than had been projected. I commend our staff for their excellent work in assuring once again a smooth transition for bank customers with these resolutions. The FDIC continues to stand by the nation’s insured deposits with the full faith and credit of the U.S. government. No depositor has ever lost a penny of their insured deposits.”

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-405-8739. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/colonial-al.html.

As of June 30, 2009, Colonial Bank had total assets of $25 billion and total deposits of approximately $20 billion. BB&T will purchase approximately $22 billion in assets of Colonial Bank. The FDIC will retain the remaining assets for later disposition.

The FDIC and BB&T entered into a loss-share transaction on approximately $15 billion of Colonial Bank’s assets. BB&T 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 is also expected to minimize the disruptions for loan customers.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $2.8 billion. BB&T’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives. Colonial Bank is the 74th FDIC-insured institution to fail in the nation this year, and the first in Alabama. The last FDIC-insured institution to be closed in the state was Birmingham FSB, Birmingham, on August 21, 1992.

It could be an ugly Friday afternoon for bank closures, with Colonial BancGroup apparently teetering on the edge. That bank, which has more than 300 branches mostly in the southern U.S., would be the biggest so far in 2009 if it happens. The first FDIC bank closure of the day is much smaller, however. Here are the details:

Dwelling House Savings and Loan Association, Pittsburgh, Pennsylvania, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with PNC Bank, National Association, Pittsburgh, Pennsylvania, to assume all of the deposits of Dwelling House Savings and Loan Association.

The sole branch of Dwelling House Savings and Loan Association will reopen on Monday as a branch of PNC Bank, National Association. Depositors of Dwelling House Savings and Loan Association will automatically become depositors of PNC Bank, National Association. 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 institutions should continue to use the existing branches until PNC Bank, National Association can fully integrate the deposit records of Dwelling House Savings and Loan Association.

Over the weekend, depositors of Dwelling House Savings and Loan Association can access their money through the normal channels. Loan customers should continue to make their payments as usual.

As of March 31, 2009, Dwelling House Savings and Loan Association had total assets of $13.4 million and total deposits of approximately $13.8 million. In addition to assuming all of the deposits of the failed bank, PNC Bank, National Association agreed to purchase approximately $3 million of the failed bank’s 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 1-800-760-3639. The phone number will be operational this evening until 9:00 p.m., Eastern Daylight Time (EDT); on Saturday from 9:00 a.m. to 6:00 p.m., EDT; on Sunday from noon to 6:00 p.m., EDT; and thereafter from 8:00 a.m. to 8:00 p.m., EDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/dwelling.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $6.8 million. PNC Bank, National Association’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives. Dwelling House Savings and Loan Association is the 73rd FDIC-insured institution to fail in the nation this year, and the first in Pennsylvania. The last FDIC-insured institution to be closed in the state was Metropolitan Savings Bank, Pittsburgh, on February 2, 2007.

A new study from First Ameican CoreLogic estimates that 16 percent of Bellingham properties (or 6,619) are in negative equity (owing more than the property is worth) as of June 30.

Also, 21 percent of Bellingham properties are either near negative equity or already there.

While those sound like ugly statistics, it’s actually better than the U.S. avearge. According to the study, 32 percent, or 15.2 million mortgages, are in a negative equity position. That’s slightly lower than the end of March, which reflects the recent flattening of monthly home price changes, according to the report.

No wonder people continue to curtail spending. They can’t be feeling confident about the economy if: 1. They are unsure about their jobs; and 2. Their owe more on their home than what it’s worth.

The Washington State Department of Commerce has gone through some changes and is looking for input from business people about the economic climate. The agency (formerly known as the Department of Community, Trade and Economic Development) has an online survey asking participants to rate and comment on a variety of factors, including taxes, quality of life and transportation.

To participate in the survey, which takes less than 10 minutes, click here. The survey is open until Friday, Aug.28

I haven’t had much interaction with the revamped agency, but the web site (www.commerce.wa.gov) has some interesting information, including current applications for federal recovery act funding and an agency resource book.

From AP:
NEW YORK — Few if any of the deals retailers have offered online during the recession have been as good as Best Buy
Inc.’s sale price of $9.99 on a 52-inch TV Wednesday. But it quickly turned out the offer was too good to be true.
The electronics retailer said it will not honor the $9.99 price posted Wednesday morning on its Web site for a 52-inch Samsung
flat-screen TV. By early afternoon, the TV was listed at $1,799.99, almost half off the original $3,399.99 price.
Bloggers and Twitterers lit up the Internet with posts about the offer, some insisting Best Buy must honor it, others making
jokes.
Best Buy, based in Richfield, Minn., said it has corrected an online pricing error and will not honor the incorrect price. Orders
made Wednesday morning at the incorrect price will be canceled and customers will receive refunds, the company said.
Best Buy did not immediately return a call for additional comment.

I saw an interesting article by Christopher Leonard of The Associated Press about job growth, which painted a dark picture about job growth and when it would return. The expectation among some economists is that the unemployment rate won’t go back to “normal” levels until 2014.

What jumped out at me was an explanation on why it’s taking longer for job growth to bounce back in recent recessions, including this one. According to a study by the Federal Reserve Bank, downturns are increasingly structural, meaning the jobs disappear for good. U.S. jobs lost in manufacturing, for example, disappeared for good. That increases the period needed for new jobs to be created and workers trained, according to the article.

The article also pointed out that it takes a net gain of about 127,000 new jobs eah month just to absorb new job seekers created by population growth and immigration.

It seems as though that long lag may be taking place in Whatcom County. We’ve had some structural job losses, especially with entire companies such as Johnons Outdoors, leaving the area. What is the best way to start working on job creation?

Community First Bank in Prineville, Ore. was shut down late Friday afternoon by the FDIC and taken over by Home Federal Bank of Nampa, Idaho to become the 72nd bank closure this year in the U.S. Cost to the FDIC: $45 million.

The FDIC has shut down two Florida banks this afternoon, bringing the total this year to 71. Here are the details (I’ll update this post if there are others this afternoon):

#70: First State Bank of Sarasota, Fla. was shut down by the FDIC, then taken over by Stearns Bank of St. Cloud, Minn. Cost to the FDIC: $116 million.

#71 Community National Bank of Sarasota County, Venice Fla. was shut down, then taken over by Starns Bank of St. Cloud, Minn. Cost to the FDIC: $24 million.

There were 79 Whatcom County bankruptcy filings last month, according to the latest data from the U.S. Bankruptcy Court Western District in Seattle.

That’s the highest monthly total since October 2005, when there were significant changes to the rules making it more difficult to file. The previous high was 77 in April.

Year-to-date, there have been 471 Whatcom County bankruptcy filings.