FDIC reports another portion of bank failures

Regulators on Friday closed Temecula Valley Bank and Vineyard Bank in California, as well as First Piedmont Bank and BankFirst in Georgia and South Dakota, bringing the total number of federally insured banks to fail this year to 57. According to the FDIC, which was appointed a receiver of the four banks, the cost to the deposit insurance fund from the failure of Temecula will be $391 million and $579 million for California Bank & Trust. For First Piedmont Bank, the cost is put at $29 million and the cost to the fund from BankFirst's failure is estimated at $91 million.

The FDIC and First-Citizens entered a loss-sharing agreement covering about $1.3 billion of Temecula`s assets. San Diego-based California Bank & Trust and the agency agreed to a loss-share transaction for about $1.5 billion of Vineyard assets. California Bank & Trust will buy about $1.8 billion of assets. The FDIC will retain the remaining assets for later disposition.

Besides, First American Bank and Trust Co. of Athens, Ga. agreed to acquire about $111 million of First Piedmont`s assets and to assume all deposits. And Alerus Financial, based in Grand Forks, N.D., will assume all the deposits of BankFirst as well as $72 million in assets. In addition, the federal agency and First American Bank and Trust struck a loss-sharing agreement on about $90 million of First Piedmont Bank's assets. And Beal Bank Nevada, based in Las Vegas, agreed to purchase $177 million of BankFirst's loans.

Furthermore, the Treasury Department has launched a program in which financial firms will buy as much as $40 billion worth of banks' soured, mortgage-linked investments. That amount is far below the potential $1 trillion in assets that the government originally hoped to take off the banks' books through the program and another that would have targeted bad loans.

The number of banks on the FDIC's list of problem institutions reached an all-time high since 1994 - 305 in the first quarter from 252 in the fourth quarter. The FDIC expects U.S. bank failures to cost the insurance fund around $70 billion through 2013.