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Tennessee bank collapse largest since April 2010

Posted: Jan. 30, 2012 | Tags: banks, BankTracker, failed banks, FDIC, TARP

Friday’s failure of the Tennessee Commerce Bank of Franklin, Tenn., is the costliest bank collapse since April 30, 2010, according to the Federal Deposit Insurance Corp.

The FDIC estimated that closing the Tennessee bank would cost the deposit insurance fund $416.8 million. That would mean it cost more than any of the 92 banks that failed in 2011 or the 93 that were closed between April 30 and Dec. 31, 2010.

On April 30, 2010, the FDIC took over five banks that each cost more than $600 million. The total cost to the fund that day was more than $7.35 billion, more than the estimated cost $7.2 billion of all the failures in 2011.

Last year’s costliest failure was the Jan. 21 collapse of the United Western Bank of Denver, which the FDIC said would cost $312.8 million.

With four closings on Friday, the FDIC now has taken over seven banks this year, at an estimated cost of $850 million.

In addition, Tennessee Commerce’s failure likely will cost the Treasury $30 million in TARP funding that won’t be repaid. The bank’s parent company, Tennessee Commerce Bancorp. Inc., received the $30 million on Dec. 19, 2008. Treasury Department reports indicate that the company also owes $1,125,000 in unpaid dividends on the TARP funds.

Unlike many banks that end up failing, Tennessee Commerce’s collapse appears to have come relatively quickly. According to FDIC data compiled and analyzed by the Investigative Reporting Workshop, the bank made $4.5 million in the first three quarters of 2010, but then lost $116 million in the first nine months of 2011 as bad loans piled up.

Here is a list of bank failures so far this year.

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