Capital Gold Group Report: Two more banks fail; FDIC sells deposits
Mutual of Omaha Bank takes over accounts of California, Nevada lenders
SAN
FRANCISCO (MarketWatch) -- Two more banks were shut down by federal
regulators late Friday, who sold the banks' deposits to Mutual of Omaha
Bank. It brings to seven the number of bank failures so far this year.
The Federal Deposit Insurance Corp. said it was appointed receiver of
First National Bank of Nevada, based in Reno, Nev., and First Heritage
Bank of Newport Beach, Calif. - both units of First National Bank
Holding Co., of Scottsdale, Ariz.
Mutual of Omaha Bank's
acquisition of all deposits was the "least costly" resolution for the
Deposit Insurance Fund compared to all alternatives because the
expected losses to uninsured depositors were fully covered by the
premium paid for the banks' franchises, the FDIC said in a statement.
All depositors,
including those with deposits in excess of the FDIC's insurance limits,
will automatically become depositors of Mutual of Omaha Bank for the
full amount of their deposits, the FDIC said.
Over the
weekend, customers of the banks can access their money by writing
checks or using ATM or debit cards. Checks drawn on the banks will be
processed normally. Loan customers should continue to make loan
payments as usual.
As of June 30, 2008,
First National of Nevada had total assets of $3.4 billion and total
deposits of $3.0 billion. First Heritage Bank had total assets of $254
million and total deposits of $233 million, the FDIC said.
In addition to assuming
all of the deposits of the banks, Mutual of Omaha Bank will purchase
approximately $200 million of assets from the receiverships.
Mutual of Omaha Bank
will pay the FDIC a premium of 4.41% to assume all the deposits. The
FDIC will retain the remaining assets for later disposition, the FDIC
said.
FDIC will retain most of First National's loan portfolio, Mutual of Omaha Bank said in a statement on its Web site.
The FDIC said the failures would likely cost the FDIC's deposit
insurance fund roughly $862 million. The failed banks had combined
assets of $3.6 billion, .03% of the $13.4 trillion in assets held by
the 8,494 institutions insured by the FDIC.
Overwhelmed by Problem Loans
The Office of the Comptroller of the Currency, a division of the
Treasury Department, said First National Bank of Nevada "was
undercapitalized and had experienced substantial dissipation of assets
and earnings due to unsafe and unsound practices," according to a
report in the online edition of The Wall Street Journal.
First National Bank of
Nevada had 25 branches, 15 in Arizona and 10 in Nevada, some of which
came from its June 30 merger with the First National Bank of Arizona.
The Journal also
reported that according to regulatory filings, the Arizona-based bank
that was folded into First National Bank of Nevada had a net loss of
$131.3 million in the first quarter. The bank had $95.9 million in
loan-loss provisions, a sign that it was being overwhelmed by problem
loans, the Journal report noted. First National Bank of Nevada had a
first-quarter net loss of $7.3 million, hurt by a loan-loss provision
of $18 million.
First Heritage Bank,
which specializes in commercial banking, operated three locations in
the Los Angeles area. It had a first-quarter net loss of $1.9 million,
according to a regulatory filing.
Mutual of Omaha Bank
has more than $750 million in assets and operates 14 retail branches in
Nebraska and Colorado with commercial lending offices in Dallas and Des
Moines, Iowa. It is a subsidiary of insurance and financial services
company Mutual of Omaha.
"We would first like to
reassure all customers of First National Bank of Nevada and First
Heritage Bank that all their deposits are safe and accessible," Jeffrey
R. Schmid, Mutual of Omaha Bank's chairman and chief executive, said in
a statement. "Their deposits will automatically transition to Mutual of
Omaha Bank and we will be open for business on Monday morning."
Earlier this month,
IndyMac Bancorp Inc. became the biggest casualty of the subprime
mortgage crisis over the weekend, as federal regulators shut down the
troubled Pasadena, Calif.-based savings bank in one of the largest U.S.
bank failures ever. See related story. 
Capital Gold Group, bank failures, FDIC, First Heritage Bank, First National Bank of Nevada, Mutual of Omaha Bank, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold
