US bank failures from 2007 to 2009

Researches reveal that the number of bank failures has increased dramatically in recent times. As an effect of the ongoing economic downturn in US, regulators have recently closed 7 small banks in United States of America. Reports reveal that there are all total 64 bank failures in this year. The figure is much higher in comparison to 25 bank failures in 2008 and only 5 in the year 2007.

Out of 7 banks that were closed, 6 of them were situated in Georgia. They were subsidiaries of Security Bank Corporation. According to the Federal Deposit Insurance Corporation (FDIC), these banks comprised of 20 branches with a total of $2.4 billion in deposits and $2.8 million in assets. It is estimated that these failures will cost about $807 million to the FDIC deposit insurance fund.

As per FDIC report, a group of 26 investors have contributed about $300 million capital to the State Bank and the Trust Corporation so that they can finance the deposit assumption as well as purchase the assets. FDIC also assumes that Waterford Village Bank of Clarence, New York, was closed with about $58 million deposits along with assets worth $61.4 million. According to Evans Bank NA of Angola, the failure of Waterford will cost about $5.6 million to FDIC’s insurance fund.

Statistical data reveals that there are about 19 bank failures in July, 2009. These failures are draining FDIC’s deposit insurance fund; therefore, the agency has taken several steps. It includes assessment of banks in order to replenish the lost fund. It closely monitors problem banks and prepares a list of them. It has already prepared a list of 305 undisclosed institutions in the first quarter of the year. The second list is expected sometime in the month of August.

A recent report states that the second-largest publicly traded bank in Texas, the Guaranty Financial Group Inc. is about to fail following loan losses and write-downs that has left it significantly short of capital. This financial institution has about $16 billion assets with more than 150 branches in California and Texas. If it fails, then it’ll be the largest US bank to collapse in the year 2009.

Seattle based Washington Mutual with $307 billion assets is the biggest bank failure in the history of USA during this ongoing economic crisis. This bank was closed in September 2008 as it was suffering from losses due to liquidity problems and sourced mortgages.