Recently, in St. Paul, Minnesota, regulators shut down Pinehurst Bank, making it the 73rd FDIC insured bank to close, and the sixth in Minnesota this year alone. And with this closing, the number of failed banks has more than doubled what it was in May of 2009. The FDIC has a list of another 73 banks at risk of failing within the first quarter of 2010.
Roughly 775 banks are already on the Feds’ at risk list—all with nearly $431 billion in assets. Minnesota’s Pinehurst Bank maintained $61.2 million in assets with a reported $58.3 million in deposits. Through a deal managed by the FDIC, Coulee Bank located in La Crosse, Wisconsin, will take over Pinehurst.
The Wisconsin-based bank paid a premium of 1.33% to the FDIC for the acquired deposits, without receiving a loss-share agreement on assets bought. This is unique for the FDIC as they have, thus far, offered loss-share agreements on most failed bank transactions. This will no doubt, send a strong message to future at risk banks and their saviors.
Pinehurst Bank joins the long list of hundreds of community banks, who buckled under the US’ credit crisis and ill-fated loans. The bank’s closing was estimated to cost the FDIC an estimated $6 million. The Feds have consistently requested banks increase capital in order to cover unexpected loan losses, but this proves a larger-than-life task as more banks fall.