February 26, 2013

Federal regulators have closed three banks so far this year, down from 11 closed through Feb. 24 of 2012, according to research from SNL Financial.

The three banks closed are Covenant Bank, which had one branch in Chicago and $58.4 million in assets; 1st Regents Bank in Andover, Minn., which also had one branch and $49.6 million in total assets; and Westside Community Bank, a $91.9 million bank that operated two branches in the Tacoma, Wash. area.

As of Feb. 22, the three bank failures thus far in 2013 did not involve a loss-share agreement. According to SNL, in 2012, the FDIC entered loss-share agreements with the buyers of 20 of the 51 closed banks, and in 2011, the FDIC entered loss-share agreements with the buyers of 58 of the 92 closed banks.

Under the loss-share agreement, the FDIC absorbs a portion of the loss on a specified pool of assets which maximizes asset recoveries and minimizes FDIC losses, according to the agency.

The median cost to the deposit insurance fund at the time of announcement as a percentage of the failed banks' assets was 22 percent in 2013, compared with 21 percent in 2012 and 23 percent in 2011, according to SNL.

[See Also: Bank Failures Ocurring at Slower Rate]

ABOUT THE AUTHOR
Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as ...