Bank failures are running at more than twice the pace of last year, when 140 federally insured banks failed. An increase in the pace of credit union failures isn’t far behind.
By this time last year, 77 mortgage-related operations had ended business, including 37 banks insured by the Federal Deposit Insurance Corporation and five credit unions.
With last week’s failure of two financial institutions, this year’s toll has climbed to 103, including 82 banks and nine credit unions.
On Wednesday, Orange County Employees Credit Union was closed by the Texas Credit Union Department. The National Credit Union Administration, which blamed a declining financial condition for the failure, was appointed liquidating agent.
Sabine Federal Credit Union agreed to assume the Orange County’s $2 million in assets as well as the liabilities of the failed institution, which served more than 1,000 members. Orange County was the ninth credit union to fail during 2010.
On Friday, the Washington Department of Financial Institutions seized 20-year-old Washington First International Bank and handed it over to the FDIC as receiver. The state blamed “large loan losses associated with land development and construction lending” for the Seattle-based bank’s demise.
East West Bank agreed to acquire around $501 million of Washington First’s $521 in assets — which included $43 million in residential loans, $207 million in commercial mortgages and $97 million in construction-and-land-development loans. The FDIC agreed to share in losses on $419 million of the assets.
Pasadena, Calif.-based East West also assumed the failed bank’s $441 in deposits for an 0.5 percent premium.
The FDIC estimated associated losses to its Deposit Insurance Funds at $158 million.
Washington First had 70 employees, faced an FDIC prompt corrective action in April and was hit with an FDIC cease-and-desist order in September 2009. It was the 82nd FDIC-insured bank to fail this year and the 103rd mortgage-related closing tracked so far during 2010 by MortgageDaily.com.
