Washington state bank closes; first failure of '13
U.S. regulators on Friday closed a small lender in Washington state, making it the first bank failure of 2013 following 51 closures last year.
The Federal Deposit Insurance Corp. seized Westside Community Bank, based in University Place, Wash., and Sunwest Bank, based in Irvine, Calif., agreed to assume all of the failed lender's deposits and buy essentially all of its assets.
Westside Community Bank had $97.7 million in assets and $96.5 million in deposits as of Sept. 30. Its failure is expected to cost the deposit insurance fund $20.3 million.
U.S. bank closures have been declining since they peaked in 2010 in the wake of the financial crisis and the Great Recession.
In 2007, just three banks went under. That number jumped to 25 in 2008, after the meltdown, and ballooned to 140 in 2009.
In 2010, regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. The FDIC has said 2010 likely was the high-water mark for bank failures from the recession. They declined to a total of 92 in 2011.
Last year's bank failures trickled to 51, but that's still more than normal.
In a strong economy, an average of only four or five banks close annually. The sharply reduced pace of closings shows sustained improvement.
From 2008 through 2011, bank failures cost the deposit insurance fund an estimated $88 billion, and the fund fell into the red in 2009. But with failures slowing, the fund's balance turned positive in the second quarter of 2011. By Sept. 30, it stood at $25.2 billion, up from $22.7 billion at the end of June.
The FDIC expects bank failures from 2012 through 2016 to cost $10 billion.