And the FDIC is broke.
Regulators seized five banks in Florida, Missouri, New Mexico, Oregon and Washington, lifting the total number of failures this year to nine as financial institutions struggle with loan defaults and a weak economy.
Two of the five institutions had assets of more than $1 billion. The Florida bank, in Miami, was sold to an investment group that includes former North Fork Bancorp Chief Financial Officer Dan Healy. The deposits and assets of the New Mexico bank went to Texas billionaire Andrew Beal.
The Federal Deposit Insurance Corp. estimated the Friday closings will cost the agency’s cash-strapped deposit-insurance fund a total of $531.7 million.
Since 2008, regulators have shut down 174 banks, and the expectation is that failures will continue to accelerate in 2010 amid heightened regulatory scrutiny. FDIC Chair Sheila Bair has predicted that failures will “peak” this year and then “subside.”
In the first seizure Friday, the FDIC sold Miami-based Premier American Bank’s four branches, $326 million in deposits and some of its assets to a subsidiary of Naples, Fla.-based Bond Street Holdings LLC, a group granted a preliminary “shelf charter” in October 2009 to establish a new national bank. Regulators have been encouraging investors to apply for such charters as a way of expanding the pool of potential buyers, and this is the first time a group was successful in using the tool to pick up a failed institution, according to the Office of the Comptroller of the Currency.
Bond Street Holdings was allowed to keep Premier American’s name, and it will reopen on Monday as Premier American Bank N.A. Bond Street Holdings has raised $440 million from about 65 mutual funds, hedge funds, private equity firms and individuals, according to Mr. Healy, an investor who now is CEO and chairman of the new Premier American. Another investor is Stuart Oran, a senior managing director of advisory firm FTI Consulting and former executive with United Airlines.
Mr. Healy, returning to the banking business more than three years after Melville, N.Y.-based North Fork sold to Capital One Financial Corp., said his group targeted the Southeast, particularly Florida, while looking for its first acquisition.
“I anticipate there could be others,” Mr. Healy said.
The FDIC and Bond Street also agreed to share losses on $300 million of the failed bank’s assets.
In the second failure Friday, state regulators closed Leeton, Mo.-based Bank of Leeton and the FDIC sold the sole branch and all $20.4 million in deposits to Salina, Kan.-based Sunflower Bank. The FDIC will retain most of the assets.
The third failure was Charter Bank in Santa Fe, N.M. The eight branches, $851.5 million in deposits and almost all of the $1.2 billion in assets went to a subsidiary of Plano, Texas-based Beal Financial Corp. Mr. Beal is a race-car-driving, poker-playing banker who has been purchasing troubled assets throughout the financial crisis and once sued the FDIC over loans he bought following another bank seizure.
Charter Bank will reopen on Monday with the same name. Beal and FDIC agreed to share losses on $805.5 million in assets.
The fourth failure Friday was Evergreen Bank in Seattle. The FDIC transferred seven branches, all $439.4 million in deposits and almost all the $488.5 million in assets to Umpqua Bank of Roseburg, Ore. The FDIC and Umpqua will share losses on $379.5 million in assets. As part of this transaction the FDIC will acquire a “cash participant instrument,” which means the agency gets some upside benefit if the acquiring bank’s stock price goes up in the short term.
The fifth failure Friday was Columbia River Bank of The Dalles, Ore. The 21 branches, all $1 billion in deposits and almost all $1.1 billion in assets went to Columbia State Bank of Tacoma, Wash. The FDIC and Columbia State Bank agreed to share losses on $697.4 million in assets.
Write to Dan Fitzpatrick at [email protected]
By DAN FITZPATRICK
JANUARY 23, 2010
Source: The Wall Street Journal