Regulators Shutter Irwin Financial Banks

WASHINGTON ( TheStreet) -- Regulators shut down the two banking subsidiaries of Irwin Financial ( IFC) Friday, bringing the total number of failed U.S. banks and thrifts in 2009 to 94.

Indiana regulators closed Irwin Union Bank & Trust of Columbus, Ind., and the Office of Thrift Supervision shuttered Irwin Union Bank FSB of Louisville, Ky. The Federal Deposit Insurance Corp. was appointed receiver and sold both institutions to First Financial Bank NA of Hamilton, Ohio, a subsidiary of First Financial Bancorp ( FFBC).

Irwin Financial had announced Wednesday that it was unlikely to meet the capital and liquidity requirements of a regulatory cease and desist order. The holding company also said that regulators had required a restatement of Irwin Union Bank & Trust's second-quarter financial statements, to better recognize loan losses.

Irwin Union Bank & Trust had $2.7 billion in assets and $2.1 billion in deposits. Irwin Union Bank FSB had $493 million in assets and $441 million in deposits. The failed institutions' 27 branches were set to reopen Saturday as branches of First Financial Bank.

First Financial Bank acquired more than $200 million in nonaccrual loans from the failed institutions and entered into a loss-sharing agreement with the FDIC on $2.5 billion of the combined institutions' assets.

The FDIC released additional information about its loss-sharing agreements, possibly as a response to the growing perception that many acquirers of failed banks and thrifts are getting amazing bargains because of the agreements.

Although the agreements vary, the FDIC usually covers 80% of commercial loan losses for the first five years after the acquisition, up to a threshold amount (the FDIC's cost estimate), and 95% of losses above the threshold. For residential loans, the agency covers 80% of losses for 10 years, and 95% of losses above the threshold.

The FDIC estimated the cost to its insurance fund for the two failures would be $850 million.

Ongoing Bank Failure Coverage

All failures for 2008 and 2009 through last week are detailed in TheStreet.com's interactive bank failure map:

Georgia leads all states with 23 bank or thrift failures during 2008 and 2009, followed by Illinois with 17, California with 14, Florida with eight and Nevada with five.

J.P. Morgan Chase ( JPM), which acquired Washington Mutual, the largest-ever bank or thrift to fail in the U.S., is among the large bank holding companies that have acquired failed institutions during 2008 and 2009. Others include SunTrust Banks ( STI); Regions Financial ( RF); Fifth Third Bancorp ( FITB); U.S. Bancorp ( USB); Zions Bancorp ( ZION); PNC Financial ( PNC); and BB&T ( BBT).

Free Financial Strength Ratings

TheStreet.com Ratings issues independent and very conservative financial strength ratings on each of the nation's 8,500 banks and savings and loans. They 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.

TheStreet.com Ratings also provides award-winning stock ratings, which are available on the Stock Ratings Screener.

TheStreet.com Ratings was recently ranked the No. 1 independent stock selector during the market meltdown by BNY ConvergEx Group's BNY Jaywalk.

-- Reported by Philip van Doorn in Jupiter Fla.

Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.

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