Which Banks Failed in 2008?

The financial crisis of 2008 is considered one of the most significant economic events in recent history. The collapse of the housing market and subsequent credit crunch led to a series of bank failures, as financial institutions struggled to manage their losses. In this blog post, we’ll delve into the details of the bank failures that occurred in 2008, using data from a comprehensive table of these incidents.

How Many Banks Failed in 2008?

A total of 25 banks failed in 2008 with collective assets of $373.6 billion failed in 2008. The failures affected millions of customers. Some of the most prominent failures include Washington Mutual Bank, Downey Savings and Loan Association, IndyMac Bank, F.S.B., and Franklin Bank, SSB.

List of Bank Failures in 2008

The following is a detailed analysis of these bank failures, with a focus on the closing dates, approximate assets and deposits, and the acquirers and transactions that followed. The FDIC was heavily involved in each of these situations.

Washington Mutual Bank, Henderson, NV

• Closing Date: September 25, 2008
• Approximate Assets: $307 billion
• Approximate Deposits: $188 billion
• Acquirer & Transaction: JPMorgan Chase acquired the banking operations of Washington Mutual Bank and agreed to assume all deposits (approximately $188 billion) in a transaction facilitated by the FDIC.

On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual Bank in a transaction facilitated by the Federal Deposit Insurance Corporation (FDIC). The acquisition ensured that all depositors were fully protected, and there was no cost to the Deposit Insurance Fund. The FDIC Chairman, Sheila C. Bair, assured customers that the transition would be seamless, with no interruption in services.

JPMorgan Chase acquired the assets, assumed the qualified financial contracts, and made a payment of $1.9 billion, while claims by equity, subordinated, and senior debt holders were not acquired. Washington Mutual Bank and its subsidiary, Washington Mutual FSB, had combined assets of $307 billion and total deposits of $188 billion. The Office of Thrift Supervision closed Washington Mutual Bank, and the FDIC was named receiver.

IndyMac Bank, F.S.B., Pasadena, CA

• Closing Date: July 11, 2008
• Approximate Assets: $32.01 billion
• Approximate Deposits: $19.06 billion
• Acquirer & Transaction: Non-brokered insured deposits and substantially all of the assets were transferred to IndyMac Federal Bank, F.S.B., Pasadena, California. The FDIC was named Conservator.

On May 19, 2009, the Federal Deposit Insurance Corporation (FDIC) completed the sale of IndyMac Federal Bank FSB, Pasadena, California, to OneWest Bank, FSB, a new federal savings bank organized by IMB HoldCo LLC. OneWest assumed all deposits of IndyMac Federal, and the bank’s 33 branches reopened as branches of OneWest. Depositors of IndyMac Federal automatically became depositors of OneWest, with their deposits continuing to be insured by the FDIC.

As of January 31, 2009, IndyMac Federal had total assets of $23.5 billion and total deposits of $6.4 billion. OneWest agreed to purchase all deposits and approximately $20.7 billion in assets at a discount of $4.7 billion, while the FDIC retained the remaining assets for later disposition. The FDIC and OneWest entered into a loss share transaction on the single-family residential portfolio, with OneWest continuing the FDIC’s existing loan modification program.

Downey Savings and Loan Association, F.A., Newport Beach, CA

• Closing Date: November 21, 2008
• Approximate Assets: $12.8 billion
• Approximate Deposits: $9.7 billion
• Acquirer & Transaction: U.S. Bank, National Association, acquired the banking operations of Downey Savings and Loan Association and agreed to assume all deposits in a transaction facilitated by the FDIC.

On November 21, 2008, U.S. Bank, National Association, acquired the banking operations, including all deposits, of Downey Savings and Loan Association, F.A., Newport Beach, CA, and PFF Bank & Trust, Pomona, CA, in a transaction facilitated by the Federal Deposit Insurance Corporation (FDIC). The combined 213 branches of both organizations reopened as branches of U.S. Bank, with depositors automatically becoming depositors of U.S. Bank and their deposits continuing to be insured by the FDIC.

As of September 30, 2008, Downey Savings had total assets of $12.8 billion and total deposits of $9.7 billion.

U.S. Bank assumed all deposits and purchased virtually all assets of both banks, with the FDIC retaining any remaining assets for later disposition.

The FDIC and U.S. Bank entered into a loss share transaction, with U.S. Bank assuming the first $1.6 billion of losses on the covered asset pools. The FDIC would then share in any further losses. U.S. Bank also agreed to implement a loan modification program similar to the one announced by the FDIC in August, following the failure of IndyMac Bank, F.S.B., Pasadena, CA.

Franklin Bank, SSB, Houston, TX

• Closing Date: November 7, 2008
• Approximate Assets: $5.1 billion
• Approximate Deposits: $3.7 billion
• Acquirer & Transaction: Prosperity Bank, El Campo, TX agreed to assume all deposits.

On November 7, 2008, Franklin Bank, S.S.B., Houston, Texas, was closed by the Texas Department of Savings and Mortgage Lending, with the Federal Deposit Insurance Corporation (FDIC) named as the receiver. To protect depositors, the FDIC entered into a purchase and assumption agreement with Prosperity Bank, El Campo, Texas, which assumed all deposits, including those exceeding the insurance limit, of Franklin Bank.

Franklin Bank’s 46 offices reopened as branches of Prosperity Bank under their normal hours. Depositors of Franklin Bank automatically became depositors of Prosperity Bank, and deposits continued to be insured by the FDIC. As of September 30, 2008, Franklin Bank had total assets of $5.1 billion and total deposits of $3.7 billion. Prosperity Bank agreed to assume all deposits, including brokered deposits, for a premium of 1.7 percent, and to purchase approximately $850 million of assets. The FDIC retained the remaining assets for later disposition.

PFF Bank and Trust, Pomona, CA

• Closing Date: November 21, 2008
• Approximate Assets: $3.7 billion
• Approximate Deposits: $2.4 billion
• Acquirer & Transaction: In a transaction facilitated by the FDIC, U.S. Bank, National Association, acquired the banking operations of PFF Bank and Trust, and agreed to assume all deposits.

First National Bank of Nevada, Reno, NV

• Closing Date: July 25, 2008
• Approximate Assets: $3.4 billion
• Approximate Deposits: $3 billion
• Acquirer & Transaction: Mutual of Omaha Bank, Omaha, Nebraska agreed to assume all deposits (approximately $3.0 billion). On June 30, 2008, First National Bank of Arizona, Scottsdale, Arizona, merged with First National Bank of Nevada and was included in this action.

ANB Financial, National Association, Bentonville, AR

• Closing Date: May 9, 2008
• Approximate Assets: $2.1 billion
• Approximate Deposits: $1.8 billion
• Acquirer & Transaction: Pulaski Bank and Trust Company, Little Rock, AR agreed to assume the non-brokered insured deposits (approximately $212.9 million).

Silver State Bank, Henderson, NV

• Closing Date: September 5, 2008
• Approximate Assets: $2 billion
• Approximate Deposits: $1.7 billion
• Acquirer & Transaction: Nevada State Bank, Las Vegas, NV agreed to assume the non-brokered insured deposits.

Integrity Bank, Alpharetta, GA

• Closing Date: August 29, 2008
• Approximate Assets: $1.1 billion
• Approximate Deposits: $974 million
• Acquirer & Transaction: Regions Bank, Birmingham, AL agreed to assume all deposits.

Columbian Bank and Trust, Topeka, KS

• Closing Date: August 22, 2008
• Approximate Assets: $752 million
• Approximate Deposits: $622 million
• Acquirer & Transaction: Citizens Bank and Trust Company, Chillicothe, MO agreed to assume all deposits.

Community Bank, Loganville, GA

• Closing Date: November 21, 2008
• Approximate Assets: $681 million
• Approximate Deposits: $611.4 million
• Acquirer & Transaction: Bank of Essex, Tappahannock, VA agreed to assume all deposits.

Haven Trust Bank, Duluth, GA

• Closing Date: December 12, 2008
• Approximate Assets: $572 million
• Approximate Deposits: $515 million
• Acquirer & Transaction: Branch Banking and Trust Company, Winston-Salem, NC assumed all deposits.

Security Pacific Bank, Los Angeles, CA

• Closing Date: November 7, 2008
• Approximate Assets: $561.1 million
• Approximate Deposits: $450.1 million
• Acquirer & Transaction: Pacific Western Bank, Los Angeles, California agreed to assume all deposits.

Alpha Bank & Trust, Alpharetta, GA

• Closing Date: October 24, 2008
• Approximate Assets: $354.1 million
• Approximate Deposits: $346.2 million
• Acquirer & Transaction: Stearns Bank National Association, St. Cloud, MN agreed to assume the non-brokered insured deposits.

Freedom Bank, Bradenton, FL

• Closing Date: October 31, 2008
• Approximate Assets: $287 million
• Approximate Deposits: $254 million
• Acquirer & Transaction: Fifth Third Bank of Grand Rapids, MI agreed to assume all deposits.

First Georgia Community Bank, Jackson, GA

• Closing Date: December 5, 2008
• Approximate Assets: $237.5 million
• Approximate Deposits: $197.4 million
• Acquirer & Transaction: United Bank, Zebulon, GA assumed all deposits.

Ameribank, Inc., Northfork, WV

• Closing Date: September 19, 2008
• Approximate Assets: $115 million
• Approximate Deposits: $102 million
• Acquirer & Transaction: Pioneer Community Bank, Inc., Iaeger, West Virginia agreed to assume all deposits at Ameribank’s WV branches; The Citizens Savings Bank, Martins Ferry, OH agreed to assume all deposits at Ameribank’s Ohio branches.

First Priority Bank, Bradenton, FL

• Closing Date: August 1, 2008
• Approximate Assets: $259 million
• Approximate Deposits: $227 million
• Acquirer & Transaction: SunTrust Bank, Atlanta, GA agreed to assume the non-brokered insured deposits.

First Heritage Bank National Association, Newport Beach, CA

• Closing Date: July 25, 2008
• Approximate Assets: $254 million
• Approximate Deposits: $233 million
• Acquirer & Transaction: Mutual of Omaha Bank, Omaha, NE agreed to assume all deposits (approximately $233 million).

Main Street Bank, Northville, MI

• Closing Date: October 10, 2008
• Approximate Assets: $98 million
• Approximate Deposits: $86 million
• Acquirer & Transaction: Monroe Bank & Trust of Monroe, MI agreed to assume all deposits.

Douglass National Bank, Kansas City, MO

• Closing Date: January 25, 2008
• Approximate Assets: $58.5 million
• Approximate Deposits: $53.8 million
• Acquirer & Transaction: Liberty Bank and Trust Company of New Orleans, LA agreed to assume all deposits (approximately $53.8 million).

First Integrity Bank, National Association, Staples, MN

• Closing Date: May 30, 2008
• Approximate Assets: $54.7 million
• Approximate Deposits: $50.3 million
• Acquirer & Transaction: First International Bank and Trust, Watford City, ND agreed to assume all deposits.

Meridian Bank, Eldred, IL

• Closing Date: October 10, 2008
• Approximate Assets: $39.2 million
• Approximate Deposits: $36.9 million
• Acquirer & Transaction: National Bank of Hillsboro, IL assumed all deposits.

Sanderson State Bank, Sanderson, TX

• Closing Date: December 12, 2008
• Approximate Assets: $37 million
• Approximate Deposits: $27.9 million
• Acquirer & Transaction: Pecos County State Bank, Fort Stockton, TX assumed all deposits.

Hume Bank, Hume, MO

• Closing Date: March 7, 2008
• Approximate Assets: $18.7 million
• Approximate Deposits: $13.6 million
• Acquirer & Transaction: Security Bank, Rich Hill, MO agreed to assume the insured deposits (approximately $12.5 million).

Before You Go…

The bank failures of 2008 had a significant impact on the financial industry and the global economy. These failures led to increased scrutiny and regulation of financial institutions, as well as a renewed focus on risk management and transparency.

In the US, regulations were tightened on the largest banks, however banks with assets less than $100 billion were spared. This eventually led to issues which became apparent in 2023 as a number of regional banks failed due to rising interest rates.