New Bank Failures: Week of March 23

Updated from 11:34 a.m. EDT

New bank failures for the week of March 23 include Georgia's FirstCity Bank, Colorado National Bank and TeamBank of Paola, Kan., bringing to 20 the number of U.S. banks and savings and loans closed during 2009.

All 45 bank failures since the beginning of 2008 are detailed on TheStreet.com's interactive bank failure map:

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The FDIC was unable to find a buyer for FirstCity Bank, which had $778,000 in uninsured deposits. Colorado National Bank and TeamBank were subsidiaries of Team Financial Inc. (TFIN). Herring Bank of Amarillo, Texas acquired all of Colorado National's deposits, along with $117 million in assets. Great Southern Bank, held by Great Southern Bancorp (GSBC) of Springfield Mo. acquired TeamBank's retail deposits and most of its assets.

The Atlanta Business Chronicle reported that one of the reasons the FDIC was unable to find a buyer for FirstCity's branches and deposits was the institution's high level of brokered deposits. Brokered deposits totaled $173.6 million as of Dec. 31, or 67% of the institution's total deposits.

In most instances when the FDIC was successful in finding a buyer for a failed bank or thrift during 2008 or 2009, the acquiring institution bought all deposits, meaning that depositors didn't lose any money, even balances exceeding FDIC limits.

The failure of FirstCity shows that all depositors with uninsured balances in troubled institutions face an extra level of risk if their bank or thrift relies heavily on brokered deposits. Since this makes it much more difficult for the FDIC to find a buyer in the event of failure, it also increases the likelihood of losses to depositors with balances exceeding FDIC limits.

This is why TheStreet.com ratings weighs an institution's reliance on brokered deposits in the quarterly bank and thrift financial strength ratings.

Not surprisingly, states at the center of the residential housing boom have produced the greatest number of failing institutions. Out of 42 bank and thrift failures since the beginning of 2008, eight were in California and Georgia and four were in Florida.

TeamBank was included in TheStreet.com's analysis of undercapitalized banks and thrifts. Forty banks and eight thrifts were undercapitalized, by regulatory standards, based on preliminary data from Highline Financial.

FirstCity and Colorado National were not included on the list of undercapitalized banks, because they were still considered adequately capitalized under regulatory guidelines as of Dec. 31.

The Federal Deposit Insurance Corp.'s bank insurance fund totaled $18.9 billion at the end of 2008, declining $15.7 billion in the fourth quarter, as the agency handled twelve bank failures. The FDIC also announced amendments to the restoration plan for its deposit insurance fund, including an extra 20-basis point assessment on deposits, in addition to deposit insurance premiums already being collected. The assessments will be charged on Sept. 30.

TheStreet.com Ratings issues independent and very conservative financial strength ratings on each of the nation's 8,500 banks and savings and loans. These are available at no charge on the Banks & Thrifts Screener. In addition, the Financial Strength Ratings for 4,000 life, health, annuity, and property/casualty insurers are available on the Insurers & HMOs Screener.

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