October 17, 2009
Acting with
California regulators, the Federal Deposit Insurance Company has closed
San Joaquin Bank, Bakersfield, Calif., making it the 99th U.S. bank to
fail so far in 2009.
FDIC was named as a receiver, and the bank's assets were sold to Citizens Business Bank, Ontario, Calif. The five branches of San Joaquin Bank will become branches of Citizens Business Bank.
As of September 29, 2009, San Joaquin Bank had total assets of $775 million and total deposits of approximately $631 million. Citizens Business Bank did not pay the FDIC a premium for the deposits of San Joaquin Bank. In addition to assuming all of the deposits of the failed bank, Citizens Business Bank agreed to purchase essentially all of the assets.
Familiar routine
It has become a familiar routine for FDIC this year, as banks hammered by steep losses on real estate loans have gone under. California and Georgia are two of the hardest hit states.
FDIC recently told banks they must pre-pay 2010 insurance premiums in order to meet budget shortfalls within the agency, which guarantees deposits in banks up to $250,000 per depositor. There have been so many bank failures this year FDIC is running out of money.
In this case, FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $103 million. Citizens Business Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives, the agency said.
The FDIC and Citizens Business Bank entered into a loss-share transaction on approximately $683 million of San Joaquin Bank's assets. Citizens Business Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share 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.
