The FDIC took over another bank yesterday -- First Georgia Community Bank -- bringing the total number of bank failures so far this year to 23. As I posted, the FDIC likes to close banks on Friday after hours so they can reopen as branches of the acquiring bank on the following Monday morning. (Here's a post on the previous three bank failures.)
The FDIC is receiver of Jackson, Ga.-based First Georgia, which had $237.5 million in assets and $197.4 million in deposits as of November 7. United Bank of Zebulon, Ga., will take over First Georgia's deposits, reopen Its four branches, and buy about $60.6 million of First Georgia's assets. The FDIC will retain the other $176.9 million worth of assets and try to sell them.
More banks will fail. The FDIC estimates that through 2013 there will be about $40 billion in losses to the deposit insurance fund. Since its current $34.6 billion fund is below the minimum target level set by Congress, the FDIC is raising insurance premiums paid by banks and thrifts to replenish its fund. Meanwhile the number of troubled banks on the FDIC's list spiked 50% to 171 as of September 30.
Looks like First Georgia won't be the last to fail.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He and has no financial interest in the securities mentioned.
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