Three regional banks failed in Michigan, Minnesota and Colorado, raising the national tally. failures. The closures will cost FDIC $293.3 million.
By Hibah Yousuf, CNNMoney.com contributing writer
Last Updated: October 2, 2009: 9:39 PM ET
NEW YORK (CNNMoney.com) -- Three regional banks were closed by regulators on Friday evening, bringing the 2009 tally to 98.
Warren Bank, based in Warren, Mich., Jennings State Bank in Spring Grove, Minn., and Southern Colorado National Bank, Pueblo, Colo., were the latest to go down.
Customers of all three banks are protected, however. The Federal Deposit Insurance Corp., which has insured bank deposits since the Great Depression, currently covers customer accounts up to $250,000.
Michigan failure. The Huntington National Bank in Columbus, Ohio, will assume all of Warren's $501 million deposits, according to the FDIC. The bank will also purchase $83 million of the failed bank's $538 million in assets; the FDIC will retain the remainder for later disposition.
Warren Bank, the second bank failure in Michigan this year, will cost the FDIC an estimated $275 million.
Minnesota failure. Central Bank of Stillwater, Minn., will assume all of Jennings State Bank's $52.4 million deposits, according to the FDIC, and will purchase "essentially all" of the failed bank's $56.3 million in assets.
The FDIC said it entered a loss-share agreement with the acquiring bank for $37.7 million of the failed bank's assets. Such agreements are becoming more common place as the FDIC seeks leverage to convince stronger banks to take on failing institutions' risky asset portfolios.
This is the fourth time a Minnesota financial institution has been closed by regulators during 2009. The closure will cost the FDIC an estimated $11.7 million.
Colorado failure. Legacy Bank, Wiley, Colo., will assume all of the deposits of Southern Colorado National Bank's $31.9 million deposits. Legacy also agreed to buy nearly all of the $39.5 million of Southern Colorado's assets.
The FDIC signed a loss-share agreement with Legacy for $25.5 million of the failed Colorado bank's assets.
The closure marks the third bank failure for Colorado this year. The cost to the FDIC will total $6.6. million.
Accounts stay open. Customers of all three failed banks can access their money over the weekend by writing checks or using ATMs or debit cards. Checks will continue to be processed, and borrowers should make mortgage and loan payments as usual.
All branches of the failed banks will reopen on Saturday, but under their new monikers. Customers should continue using their existing branches until they receive notices that the takeovers have been completed.
An average of 10 banks have failed per month this year, nearly four times the number that failed in 2008. It's the highest tally since 1992, when 181 banks failed.
This year's failures have reduced the FDIC's insurance fund to $10.1 billion from $45 billion a year ago. In total, Friday's closures will cost FDIC $293.3 million.
Faced with dwindling funds, the FDIC discussed how to raise money to restock the fund earlier this week. The agency proposed that banks prepay their deposit insurance premiums for the next three years.
First Published: October 2, 2009: 6:53 PM ET