Bank Closures Accellerating as FDIC Seizes Fourth Bank of 2010

Four banks collapsed so far this year

Since we reported six banks seized in one day last month, the FDIC ended the year with ten more closures to total 140 banks that were seized in 2009.

Already this month, the FDIC has seized four banks as listed below:

1. Horizon Bank- Bellingham, WA, closed January 8th ($1.3B in assets)
2. Town Community Bank & Trust- Antioch, IL, closed January 15th ($70M in assets)
3. St. Stephen State Bank- St. Stephen, MN, closed January 15th ($25M in assets)
4. Barnes Banking Company- Kaysville, UT, closed January 15th ($828M in assets)

While depositors are not hurt in that there is an intermediary location for their money the FDIC sets up for them, this isn’t a good sign, especially given that according to Reuters, “The FDIC has said that the pace of bank failures will remain elevated this year because of extensive loan losses tied to home mortgages and commercial real estate.”

In 2007, three banks failed, in 2008, only 25 fell and last year a total of 140 failed with several already being seized this year that we’re barely three weeks into. With commercial real estate followed by residential continue to underperform, banks will as well. These bank closings are only one piece of a very complicated puzzle but with forecasters pointing to a grim outlook, recovery might not be as quickly reached as some are hoping it will be.