WASHINGTON ( TheStreet) -- Eight banks were shuttered by regulators Friday, bringing the 2010 tally of U.S. bank failures to 118.
Six of the eight failed banks were included in TheStreet's Bank Watch List of undercapitalized institutions, based on second-quarter regulatory data provided by SNL Financial.
The Federal Deposit Insurance Corp. found buyers for the deposits and branches for all of the failed institutions and estimated the combined cost to its deposit insurance fund would be $473.5 million.
The largest failure on Friday was ShoreBank of Chicago, which had $2.16 billion in total assets. ShoreBank received wide media coverage after Bloomberg reported Aug. 5 that the institution had been denied federal bailout funds that would have been required to complete an earlier deal to raise $145 million in capital from an investor group that included Citigroup (C - Get Report), Bank of America (BAC - Get Report), JPMorgan Chase (JPM - Get Report), Wells Fargo (WFC - Get Report), Morgan Stanley (MS - Get Report), Goldman Sachs (GS - Get Report) and Northern Trust (NTRS - Get Report).Early Friday, the Wall Street Journal reported that the same investor group had agreed to back ShoreBank's new management team in a new bid to buy ShoreBank's assets from the FDIC were it to fail. This is indeed what happened. After Illinois regulators shuttered ShoreBank, the FDIC sold the failed institution's deposits for a 0.50% premium to the newly formed Urban Partnership Bank of Chicago, which also acquired ShoreBank's assets, with the FDIC agreeing to share in 80% of losses on $1.41 billion of the acquired assets. > > Bull or Bear? Vote in Our Poll Because of the unusual nature of the failed bank's resolution and the wide media coverage before ShoreBank's failure, the FDIC released additional details about its marketing efforts for the failed bank, saying that the Urban Partnership Bank bid was the only one received and emphasizing that the senior managers retained form ShoreBank were the new management team that had joined the bank in June. FDIC spokesman David Barr told TheStreet that if the agency hadn't received the offer from the Urban Partnership group, liquidating ShoreBank could have cost the deposit insurance fund "close to $700 million." He also emphasized that ShoreBank was a designated community development bank with a business strategy of serving "underserved low-to-moderate income communities," and that Urban Partnership Bank's management would follow the same strategy and eventually seek the same designation from the Treasury. The 15 branches of ShoreBank in Chicago, Detroit and Cleveland were set to reopen during normal business hours as branches of Urban Partnership Bank. The FDIC estimated the cost to the deposit insurance fund would be $367.7 million.