After two weeks without any failures, the Federal Deposit Insurance Corp. seized two small banks on Friday.
The banks, with $365.3 million in combined assets, are expected to cost the Deposit Insurance Fund $113.1 million. Year to date, there have been 151 failures.
The Michigan Office of Financial and Insurance Regulation closed the $252.7 million-asset Paramount Bank in Farmington Hills. The FDIC entered into a purchase and assumption agreement for the failed institution with Level One Bank, also of Farmington Hills. The $211-asset Level One assumed Paramount's $213.6 million of deposits without paying a premium.
The company also agreed to purchase essentially all of the assets, while entering into a loss-sharing agreement with the FDIC for $233.1 million of those assets. The failure is expected to cost $90.2 million.
Also, the Secretary of Banking of the Commonwealth of Pennsylvania shuttered the $112.6 million-asset Earthstar Bank in Southampton. Polonia Bank in Huntingdon Valley, Pa., agreed to assume the Pennsylvania portion of failed bank's $104.5 million of deposits and did not pay a premium.
The $214 million-asset Polonia also agreed to buy $77.1 million of Earthstar's assets, with $45.8 million of those covered by a loss-sharing agreement with the FDIC. The regulator said in a press release that it will retain the balance of assets for later disposition. The failure is expected to cost $22.9 million.
