Washington bank shut, 44th in US this year: FDIC

WASHINGTON: US authorities closed a Washington state bank on Friday, bringing the total number of foreclosures in 2011 to 44.

The Federal Deposit Insurance Corp said state authorities closed First Heritage Bank in Snohomish, Wash.

The five branches of First Heritage will reopen on Tuesday as branches of Columbia State Bank, and depositors will automatically become depositors of Columbia, the FDIC said in a statement.

In 2010, 157 banks failed following 140 failures in 2009. The bulk of the failures have increasingly been smaller institutions, those with less than $1 billion in assets, as large banks have recovered more quickly from the 2007-2009 financial crisis.

First Heritage had $174 million in total assets.

FDIC Chairman Sheila Bair has said the agency expects the number of failures to drop in 2011.

Community banks continue to struggle with the weak economy and many are facing problems related to their exposure to the commercial real estate market.

On May 24 the FDIC released its latest quarterly update on the health of the banking industry, which showed that profits are at their highest level since the financial crisis took hold and that the pace of bank failures has eased.

The agency warned, though, that banks continue to boost earnings by setting aside less money to cover bad loans, rather than growing their lending.

The FDIC said that the industry earned $29 billion in the first quarter, an $11.6 billion increase from a year before. It was the highest level since the second quarter of 2007.

Copyright Reuters, 2011