April 24, 2009 / 11:20 PM / 11 years ago

UPDATE 1-Regulators close Michigan Heritage Bank-FDIC

(adds credit union and details)

WASHINGTON, April 24 (Reuters) - Bank regulators in Michigan closed Michigan Heritage Bank on Friday, the 27th U.S. bank to fail this year as the struggling economy and falling home prices take their toll on financial institutions.

The Federal Deposit Insurance Corp said Michigan Heritage had about $184.6 million in assets and $151.7 million in deposits as of Dec. 31, 2008.

Level One Bank of Farmington Hills, Michigan agreed to assume the insured deposits of Michigan Heritage, excluding $50 million in brokered deposits. FDIC said it will pay the brokers directly for the amount of their funds.

The three offices of Michigan Heritage will reopen on Monday as branches of Level One, FDIC said.

Meanwhile, the Florida Office of Financial Regulations appointed the National Credit Union Administration as conservator of Eastern Financial Florida Credit Union, which is headquartered in Miramar, Florida.

NCUA has appointed officials from Space Coast Credit Union of Melbourne, Florida to temporarily manage the day-to-day operations of Eastern Financial Florida Credit Union, which has about $1.6 billion in assets and about 200,000 members.

In 2008, 25 U.S. banks were seized by officials, up from three in 2007.

During the current financial crisis, Seattle-based lender Washington Mutual became the biggest bank to fail in U.S. history. It was closed in September while suffering from losses from soured mortgages and liquidity problems.

The FDIC will insure up to $250,000 per account through 2009 and in individual retirement accounts at insured banks.

The agency also has a running tally of problem banks that its examiners closely monitor. At the end of the fourth quarter, 252 undisclosed institutions were on that list.

Earlier, FDIC said regulators had closed American Southern Bank of Kennesaw, Georgia, which had total assets of about $112.3 million and total deposits of $104.3 million. (Reporting by Richard Cowan, editing by Leslie Gevirtz)

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