Thegatewaynews.com - Regulators shut down Ohio-based AmTrust Bank

by Marcy Gordon

AP Business Writer

Washington -- Regulators have shut down six more banks, bringing to 130 the number of U.S. banks to be brought down so far in 2009 by recession and mountains of bad debt.

The Federal Deposit Insurance Corp. on Dec. 4 took over Ohio's AmTrust Bank, the fourth-largest bank to fail this year, with about $12 billion in assets and $8 billion in deposits. The Cleveland-based bank's failure is expected to cost the federal deposit insurance fund an estimated $2 billion.

New York Community Bank, based in Westbury, New York, agreed to assume the deposits of AmTrust Bank and about $9 billion of its assets. The FDIC will retain the rest for eventual sale. AmTrust's 66 branches reopened starting Saturday as offices of New York Community Bank, the FDIC said. In addition, the FDIC and New York Community Bank agreed to share losses on about $6 billion of the failed bank's loans and other assets.

About a year ago, the federal Office of Thrift Supervision put restrictions on AmTrust because of concern that its reserves against losses were dangerously low. The regulators told the bank to limit new loans for land acquisition, development or speculative residential construction. Also seized by the FDIC on Dec. 4 were three Georgia banks: Buckhead Community Bank, based in Atlanta, with $874 million in assets and $838 million in deposits; First Security National Bank, based in Norcross, Georgia, with $128 million in assets and $123 million in deposits; and Tattnall Bank, of Reidsville, Georgia, with assets of $49.6 million and deposits of $47.3 million.

Benchmark Bank, based in Aurora, Illinois, with $170 million in assets and $181 million in deposits, also was closed, as was Greater Atlantic Bank, of Reston, Va., with $203 million in assets and $179 million in deposits.

As the economy has soured, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have accelerated and sapped billions out of the federal deposit insurance fund. It has fallen into the red. The FDIC expects the cost of bank failures to grow to about $100 billion over the next four years.

Depositors' money -- insured up to $250,000 per account -- is not at risk, with the FDIC backed by the government. The 130 bank failures have cost the federal deposit insurance fund more than $28 billion this year.