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The Journal Gazette

Friday, April 27, 2012 9:48 pm

Regulators close 5 banks in 4 states

The Associated Press

Federal regulators have closed two banks in Maryland and one each in Minnesota, South Carolina and California, bringing to 22 the number of U.S. banks that have failed so far this year.

The Federal Deposit Insurance Corp. said Friday that it shuttered Bank of Eastern Shore, in Cambridge, Md., as well as HarVest Bank of Maryland, in Gaithersburg.

Regulators also closed Inter Savings Bank in Maple Grove, Minn., Plantation Federal Bank in Pawleys Island, S.C., and Palm Desert National Bank in Palm Desert, Calif.

Combined, the closed banks had $1.42 billion in assets and $1.34 billion in deposits as of Dec. 31.

The FDIC estimates that the banks' failures will cost the insurance fund a combined $272.6 million.

The pace of bank closures has slowed sharply after ballooning following the financial crisis in 2008. By this time last year, 34 banks had failed.

In 2010, regulators seized 157 banks, the most in any year since the savings and loan crisis more than two decades ago. The 2010 failures cost the fund around $23 billion. The FDIC has said that year likely was the high-water mark for bank failures from the Great Recession.

From 2008 through 2010, bank failures cost the fund an estimated $79 billion. Last year, 92 banks failed, costing the fund about $7.9 billion. The FDIC expects failures from 2011 through 2015 to cost $19 billion.

Measured by assets and deposits, Inter Savings Bank was the largest bank among those closed Friday.

The bank, which had four branches and was doing business as InterBank FSB, had about $481.6 million in assets and $473 million in deposits.

Great Southern Bank, based in Reeds Spring, Miss., agreed to assume the assets and essentially all the deposits of Inter Savings Bank. As part of the deal, Great Southern Bank entered a loss-share agreement with the FDIC on $413 million of Inter Savings Bank's assets.

The FDIC forms such loss-share transactions in hopes of maximizing returns on the assets by keeping them in the private sector.

Sonabank, of McLean, Va., agreed to assume the deposits and nearly all the assets of HarVest Bank of Maryland. HarVest, which also had four branches, had $164.3 million in assets and $145.5 million in deposits.

Depositors of Plantation Federal Bank will have their accounts transferred to First Federal Bank in Charleston, S.C., which agreed to assume that bank's deposits and assets.

Plantation Federal Bank had six branches, about $486.4 million in assets and $440.5 million in deposits. First Federal Bank entered into a loss-share pact with the FDIC on $221.7 million of Plantation Federal's assets.

Palm Desert National Bank, which operated one branch, had about $125.8 million in assets and $122.8 million in deposits. Pacific Premier Bank agreed to assume the failed bank's deposits and essentially all of its assets.

Regulators could not find another bank to take over the assets and deposits of Bank of the Eastern Shore, so the FDIC took over the bank, renaming it the Deposit Insurance Bank of Eastern Shore.

The bank had $166.7 million in assets and $154.5 million in deposits.

Eastern Shore accountholders will have until May 25 to access their insured deposits and move them to other banks. Afterward, the FDIC will close it for good. The FDIC insures up to $250,000 per depositor.

Customers with certificates of deposits and individual retirement accounts will receive their funds by check, the FDIC said.