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TheStreet Open House

Regulators Close Three More Banks

Regulators in the U.S. shuttered two banks and one savings and loan Friday, bringing the tally of failed institutions in 2009 to six.

The Federal Deposit Insurance Corporation was named receiver all three companies.

The Utah Department of Financial Institutions shut down Magnet Bank of Salt Lake City. Unable to find a buyer for the bank's deposits, the FDIC is liquidating the bank and will mail checks to retail depositors on Monday morning.

Meanwhile, the Office of the Comptroller of the Currency closed Ocala National Bank of Ocala, Fla., and the FDIC arranged for all deposits to be assumed by CenterState Banks of Florida (CSFL - Get Report)), based in Winter Haven, Fla.

And the Office of Thrift Supervision shuttered Suburban Federal Savings Bank of Crofton, Md., with the Bank of Essex of Tappahannock, Va. assuming all deposits.

Magnet Bank

As of Dec. 2, Magnet Bank had total assets of $292.9 million and total deposits of $282.8 million. Most of the deposits were brokered CDs, making the bank unattractive to potential acquirers.

TheStreet.com Ratings had assigned Magnet Bank an E- (Very Weak) financial strength rating back in June, downgrading the institution from a D- (Weak) because of a rapid increase in losses from nonperforming construction and development loans.

Loan charge offs peaked in the third quarter, when a net loss of $24 million caused the bank's ratios to slip so far that it was considered undercapitalized per regulatory guidelines, with leverage and risk-based capital ratios of 4.94% and 6.76%, respectively. These ratios need to be at least 5% and 10%, respectively, for a bank or thrift to be considered well-capitalized.

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