US closes six banks; 2010 failures now 157

WASHINGTON (Reuters) - U.S. authorities have closed six more banks, bringing the number of closures so far this year to 157 as the aftermath of the 2007-2009 financial crisis continued to take a toll.

Smaller financial institutions, in particular, continue to feel the impact of the struggling housing market, weak economy and high unemployment. The bulk of this year’s closures have been smaller institutions, each with less than $1 billion in assets. Large banks have recovered more quickly from the financial crisis.

The Federal Deposit Insurance Corp (FDIC) has said it expects bank closures to peak this year after 140 closures in 2009.

The FDIC announced the following closures last week:

nAppalachian Community Bank of McCaysville, Georgia; had assets of $68.2 million. People’s Bank of East Tennessee of Madisonville, Tennessee, to assume the deposits

nChestatee State Bank of Dawsonville, Georgia; had assets of $244.4 million. Bank of the Ozarks of Little Rock, Arkansas, to assume the deposits.

nBank of Miami, National Association of Coral Gables, Florida; had assets of $448.2 million. 1st United Bank of Boca Raton, Florida to assume the deposits.

nUnited Americas Bank, National Association, of Atlanta, Georgia; had assets of $193.8 million. State Bank and Trust Company of Macon, Georgia to assume the deposits.

nCommunity National Bank of Lino Lakes, Minnesota; had assets of $31.6 million. Farmers & merchants Bank of Manchester, Iowa to assume deposits.

nFirst Southern Bank of Batesville; had assets of $191.8 million. Southern Bank of Poplar Bluff, Missouri to assume deposits.

FDIC Chairman Sheila Bair has said that while the number of failures already exceeds the 2009 tally of 140, the total assets of this year’s failures will probably be lower.

On 23 November the FDIC released its latest quarterly report on the state of the banking industry. It showed that the industry overall continues to recover from the financial crisis but that large banks are doing better than smaller institutions.

The net income for the banking industry was $14.5 billion for the third quarter, which compares to $21.4 billion in the second quarter and $2 billion in the third quarter of 2009, according to the FDIC.

The banking industry has been setting aside less money to guard against losses, helping to boost earnings in recent quarters.

Bair cautioned against banks reducing these reserves too quickly given the state of the economy.

Despite the improving revenues numbers for the industry as a whole, community banks continue to be hit hard by the weak economy and the amount of bad loans on their books, particularly in the commercial real estate sector.

For instance, the number of banks on the agency’s “problem list” grew to 860 from 829, to reach the highest number since March of 1993 when there were 928 institutions on the list. Most of these institutions will not fail but the list provides an indication of how many banks are struggling.

Six banks return $2.7 billion to US Treasury

WASHINGTON (Reuters) - Six bank holding companies repaid a total of $2.7 billion in federal bailout funds they received during the financial crisis, the Treasury Department said on Wednesday.

Treasury said the banks repurchased preferred shares issued as part of the Capital Purchase Programme, the main vehicle it used under its $700 billion bailout programme to inject capital into U.S. banks. They also paid accrued dividends.

The firms repaying funds were:

nHuntington Bancshares of Columbus, Ohio, repaid $1.4 billion to retire Treasury preferred and paid accrued dividends of $7.2 million;

nFirst Horizon National Corp of Memphis, Tennessee, repaid $866.5 million to retire Treasury preferred shares and paid accrued dividends totaling $4.5 million;

nWintrust Financial Corp of Lake Forest, Illinois, repaid $250 million to retire preferred shares and paid accrued dividends of $1.3 million;

nSusquehanna Bancshares Inc of Lititz, Pennsylvania, repaid $100 million worth of preferred shares and paid accrued dividends totaling $513,889;

nHeritage Financial Corp of Olympia, Washington, repaid $24 million in preferred shares and paid accrued dividends totaling $123,133, and

nThe Bank of Kentucky Financial Corp repurchased $17 million of Treasury preferred shares and paid accrued dividends of $87,361.

The repayments bring overall repayments under the Treasury’s Troubled Asset Relief Programme to $234 billion out of the overall $389 billion it disbursed.

Including the repayments and income from dividends, interest and the sale of other securities, the Treasury said its total intake from TARP is now $269 billion.

The Treasury injected some $204.9 billion into more than 700 banks. It still has about $35 billion invested in mostly smaller banks.

Treasury Secretary Timothy Geithner said last week he expects the Treasury to earn a profit on all of its TARP investments with the exception of housing rescue programmes.

He also said the final cost of Treasury bailouts may be under $25 billion.