Four U.S. Banks Fail

WASHINGTON (TheStreet) -- Regulators shut down banks four banks in three states Friday, bringing this year's total number of U.S. bank failures to 90.

All four failed institutions were included in TheStreet's Bank Watch List of undercapitalized banks and thrifts, based on first-quarter regulatory data provided by SNL Financial.

Bay National Bank

The Office of the Comptroller of the Currency shuttered Bay National Bank of Lutherville, Md. and appointed the Federal Deposit Insurance Corp. Receiver. The FDIC arranged for Bay Bank, FSB, also of Lutherville, Md., to assume the failed bank's deposits and total assets.

Bay National lost $15.5 million during 2009 from elevated provisions for loan losses and very high noninterest expenses. The institution was undercapitalized as of Dec. 31, with a tier 1 leverage ratio of 2.47% and a total risk-based capital ratio of 4.90%. These ratios need to be at least 5% and 10%, respectively, for most banks and thrifts to be considered well capitalized by regulators.

A first-quarter net loss of $2.6 million brought the capital ratios down to 1.62% and 3.75%, respectively, leaving the bank in an untenable position, since nonperforming assets (including loans past due 90 days or more, or in nonaccrual status, along with repossessed real estate) made up 9.85% of total assets as of March 31.

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The failed bank's two offices were set to reopen Saturday as branches of Bay Bank, FSB. The FDIC estimated the cost to its deposit insurance fund would be $17.4 million.

Ideal Federal Savings Bank

The Office of Thrift Supervision closed Ideal Federal Savings Bank of Baltimore. The FDIC was appointed receiver but failed to find a buyer for the failed institution and announced that insured deposits would be paid out to customers.

The FDIC arranged for retail customer deposits to be transferred to a branch of Manufacturers & Traders Trust Co. located at 715 N. Howard Street in Baltimore. Local customers would be able to access their funds at the M&T branch from July 12 through July 24, after which the FDIC was to mail checks to customers for any remaining insured deposits.

Brokered deposits were to be wired out after the FDIC received documentation from the brokers, needed to verify whether any of the deposits exceeded insurance limits.