By Margaret Chadbourn and Ari Levy Jan. 24 (Bloomberg) -- First Centennial Bank<http://www.bloomberg.com/apps/quote?ticker=FCEN%3AUS>of Redlands, California, was seized by a state regulator, the third U.S. bank to fail this year, as the recession deepens and the slump in the housing industry sends home foreclosures to records.
First Centennial, with $803.3 million in assets<http://www.bloomberg.com/apps/quote?ticker=FCEN%3AUS>and $676.9 million in deposits, was shut by the California Department of Financial Institutions and the Federal Deposit Insurance Corp. was named receiver. First California Bank, based in Westlake Village, will assume deposits. The failed bank's 6 offices will open Jan. 26 as branches of First California, the FDIC said. "Depositors of the failed bank will automatically become depositors of First California," the FDIC said in an e-mailed statement. "There is no need for customers to change their banking relationship to retain their deposit insurance coverage." Regulators closed 25 banks last year, the most since 1993, draining money from the FDIC deposit insurance fund, which had $34.6 billion as of Sept. 30. National Bank of Commerce in Berkeley, Illinois, and Bank of Clark County in Vancouver, Washington, were shuttered by regulators on Jan. 16. First California will buy about $293 million in assets and will pay a premium of 5.3 percent to assume the failed bank's insured deposits, the FDIC said. The cost to the deposit insurance fund, supported by fees on insured banks, will be an estimated $227 million, the agency said. First Centennial <http://www.bloomberg.com/apps/quote?ticker=FCEN%3AUS> had about $12.8 million in deposits that exceeded insured limits, the FDIC said. Market Value Plummets First Centennial Bancorp<http://www.bloomberg.com/apps/quote?ticker=FCEN%3AUS>, the parent of the failed bank, lost 99 percent of its market value in the past year. The FDIC, the Treasury Department and Federal Reserve have stepped up efforts to aid U.S. institutions that reported more than $500 billion in writedowns and credit losses, and raised more than $400 billion in capital last year. The U.S. on Jan. 16 gave Bank of America Corp.<http://www.bloomberg.com/apps/quote?ticker=BAC%3AUS>, the largest bank by assets, $20 billion cash and $118 billion in asset guarantees to help absorb losses after the acquisition of Merrill Lynch & Co. Citigroup Inc. <http://www.bloomberg.com/apps/quote?ticker=C%3AUS> got $20 billion and $301 billion in guarantees in November. More than 2.3 million U.S. properties got a default or auction notice, or were seized by lenders, RealtyTrac Inc., the California-based seller of default data, said Jan. 15. That's the highest total in the four years of RealtyTrac recordkeeping. Filings rose 41 percent in December from a year earlier. President Barack Obama<http://search.bloomberg.com/search?q=Barack+Obama&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>is pressing Congress to agree on a second stimulus plan to boost the economy. Lawmakers are considering an $825 billion package, and a bank rescue is likely to be included to stem foreclosures, provide capital and deal with toxic assets weighing down lenders' balance sheets. Preventing Failures The FDIC and the Office of the Comptroller of the Currency have taken steps to prevent failures, including allowing private- equity firms and other bidders to buy assets and deposits of lenders running out of cash. IndyMac Bank, the fourth-largest U.S. lender to fail last year, on Jan. 2 became the first institution sold to a private-equity investor for $1.3 billion. The sale was led by Steven Mnuchin<http://search.bloomberg.com/search?q=Steven+Mnuchin&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>of Dune Capital Management LP. The FDIC last month approved a budget for the coming year that almost doubles spending to $2.2 billion from 2008 to hire staff for handling bank closures. As much as $1 billion was allotted to manage failed banks. The FDIC oversees 8,384 institutions with $13.6 trillion in assets and insures deposits of as much as $250,000 per depositor per bank. The agency last month doubled premiums charged to banks for coverage to replenish its reserves amid agency forecasts that bank failures through 2013 will cost almost $40 billion. The FDIC classified 171 banks as "problem" in the third quarter, a 46 percent jump from the second quarter, and said industry earnings fell<http://www2.fdic.gov/qbp/2008sep/qbp.pdf>94 percent to $1.73 billion from the previous year. The agency doesn't identify problem banks by name. The largest institution to fail in U.S. history, Washington Mutual, was sold to JPMorgan Chase & Co.<http://www.bloomberg.com/apps/quote?ticker=JPM%3AUS>Sept. 25 after customers drained $16.7 billion in deposits in less than two weeks. Wachovia Corp. was near failure before being bought by Wells Fargo & Co. <http://www.bloomberg.com/apps/quote?ticker=WFC%3AUS> for $12.7 billion. -- Tell the truth boldly, whether it hurts or not. Never pander to weakness. If truth is too much for intelligent people and sweeps them away, let them go; the sooner the better. Swami Vivekananda --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
