Regulators seized five US banks on Friday, driving up the tally in what is expected to be a busy year for bank failures. The failed banks are, the Columbia River Bank of Oregon, which had about $1.1 billion in assets and $1 billion in deposits as of Sept. 30; Charter Bank of Santa Fe, New Mexico with about $1.2 billion in assets and $851.5 million in deposits as of Sept 30; Evergreen Bank of Seattle; the Premier American Bank in Miami; and the Bank of Leeton in Missouri, which had a single branch. All five failed banks were taken over by other institutions. The FDIC said this week that it expects failures to remain elevated this year as institutions continue to deal with distressed loans tied to mortgages and commercial real estate CRE. Last year 140 US banks failed, the highest annual level since 1992 in the wake of the savings and loan crisis. “While the economy is showing signs of improvement, recovery in the banking industry tends to lag behind other sectors. We expect to see the level of failures continue to be high during 2010,” said Mitchell Glassman, director of the FDIC's division of resolutions and receiverships, in testimony before Congress. The FDIC has said it expects the total bill for bank failures to reach $100 billion for the period of 2009 through 2013. FDIC Chairman Sheila Bair told a commercial real estate conference on Wednesday that troubles in the commercial real estate sector will increasingly be a driver of bank failures this year. Woes in the banking industry have migrated from home mortgages to CRE, especially for community banks that tend to have higher concentrations of commercial real estate loans. Bair said that failed banks with high concentrations of CRE may be difficult to sell as a whole bank, meaning the FDIC may resolve more institutions through securitizations. Glassman said in his testimony that the FDIC has beefed up the division in charge of bank failures, almost tripling the staff to 1,161 in 2009. That number is expected to grow to 2,310 this year.
