UPDATE 1-Small Arkansas bank fails, taken over by Iberiabank

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By John Poirier

WASHINGTON, May 9 (Reuters) - ANB Financial, a small Arkansas bank, failed and its deposits were taken over by Pulaski Bank and Trust, a unit of Iberiabank Corp (IBKC.O), the Federal Deposit Insurance Corp. said on Friday.

ANB is the third FDIC-insured institution to fail in 2008. U.S. bank regulators are bracing for an increase in bank failures this year because of the widening U.S. economic fallout from subprime mortgage foreclosures and falling residential real estate prices.

As of Jan. 31, 2008, ANB Financial had about $2.1 billion in assets and $1.8 billion in total deposits, the agency said.

ANB Financial's nine offices will reopen Monday as branches of Pulaski, and depositors will automatically become depositors of Pulaski, the FDIC said in a statement.

However, ANB had about $39.2 million in 647 deposit accounts that exceeded the federal deposit insurance limit, which means those customers will become creditors of the receivership for the amount of their uninsured funds, the FDIC said.

ANB Financial also had approximately $1.6 billion in brokered deposits that are not part of the Friday transaction. The FDIC said it will pay the brokers directly for the amount of their insured funds.

The failure of the Bentonville, Arkansas-based bank will cost the FDIC's insurance fund an estimated $214 million, the agency said.

The two other banks that failed this year were Douglass National Bank of Kansas City, Missouri, which had about $58.5 million in assets, and Hume Bank, also in Missouri, with about $18.7 million in assets.

In 2007, a total of three U.S. banks failed.

At the end of 2007, the FDIC had 76 institutions on its problem list, totaling $22 billion in assets. (Reporting by John Poirier; editing by Carol Bishopric)