The banks with $1.1 billion in total assets and $853 million in deposits were shut by regulators, and the Federal Deposit Insurance Corp. was named receiver, according to e- mailed statements yesterday from the FDIC.

Deposits of TeamBank in Paola, Kansas, will be passed to Great Southern Bank in Springfield, Missouri, and Herring Bank in Amarillo, Texas, is assuming deposits of Colorado National Bank in Colorado Springs. Both failed banks were owned by Team Financial Inc. in Paola. Regulators were unable to find a buyer for FirstCity Bank of Stockbridge, Georgia, and the FDIC will send payments to insured depositors beginning March 23.

The U.S. economy has shed 4.4 million jobs since the recession began in December 2007. Unemployment jumped to 8.1 percent in February, the highest in more than 25 years. A $787 billion government stimulus package is aimed at creating or saving 3.5 million jobs and easing credit.

“The FDIC will fulfill its obligation to insured depositors by mailing checks for their insured amounts,” the regulator said, referring to FirstCity. The agency also was unable to find a bidder for Salt Lake City-based MagnetBank, which was seized Jan. 30.

FDIC-insured banks lost $32.1 billion from October through December, the first quarterly loss since 1990. The agency’s deposit insurance fund, used to reimburse customers of closed banks, tumbled 45 percent to $18.9 billion in the quarter from $34.6 billion in the preceding period, reflecting the closing of 25 lenders last year.

‘Difficult’ Period

“There is no question that this is one of the most difficult periods we’ve had to deal with since the FDIC was created 75 years ago,” Chairman Sheila Bair said yesterday at the Independent Community Bankers of America conference in Phoenix.

Herring Bank will take Colorado National’s four branches and buy $117.3 million of assets at a discount of $4.2 million, the FDIC said. TeamBank’s 17 offices in Kansas, Missouri and Nebraska opened as Great Southern branches. The acquiring bank will buy $656.5 million in assets at a discount of $100 million. The FDIC said the three failures will cost its deposit insurance fund, supported by fees on insured banks, about $207 million.

Plan Rejected

OCC notified TeamBank on March 17 that a capital-raising plan ordered a month earlier was rejected, and any action by regulators might lead to a bankruptcy filing, Team Financial said in a regulatory filing. Chief Executive Officer Robert Weatherbie quit in September after 35 years at Team Financial, including 13 years as CEO, the company reported at the time.

Team Financial said in a regulatory filing Feb. 23 that losses for last year were $44.2 million, or $12.32 a share. The company set aside $28.5 million for bad loans.

The FDIC, which is proposing a one-time fee on banks to replenish the deposit insurance fund, may lower the charge once Congress expands the agency’s borrowing authority from the Treasury Department. Bair said the levy of 20 cents per $100 of insured deposits may be trimmed to “single digits.”

“I’m optimistic that Congress will soon act on the borrowing authority increase,” Bair told the community bankers, who are fighting the assessment. “This should give us the breathing room we need to reduce the special assessment, while covering all projected losses, with industry funds.”

Bair said the FDIC is considering calculating the levy based on a bank’s assets, rather than domestic deposits, so larger lenders will bear more of the cost.

Community Bank Complaints

Community lenders have said the one-time fee may significantly reduce 2009 earnings. The Independent Community Bankers of America said more than 1,000 bank executives complained, by letter, about the extra fees in the week after the charges were announced.

The FDIC classified 252 banks as “problem” in the fourth quarter, a 47 percent jump from the previous period and the highest total since June 1995. The Washington-based agency doesn’t name the “problem” banks. The FDIC projects bank failures will cost its insurance fund $65 billion through 2013.

The FDIC, which regulates 8,305 institutions with $13.9 trillion in assets, collects fees from banks to protect customer deposits. Congress is considering making permanent an increase in deposit-insurance coverage to $250,000 deposit coverage, up from $100,000, to increase confidence in banks.

One in 440 U.S. housing units received a foreclosure filing last month, and the total was the third-highest on record. Filings rose 6 percent from January.

To contact the reporters on this story: Ari Levy in San Francisco at alevy5@bloomberg.net; Margaret Chadbourn in Washington at mchadbourn@bloomberg.net

Last Updated: March 21, 2009 16:47 EDT

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