State and federal banking regulators seized eight financial institutions with more than $4 billion in assets last week, and four were in California. Florida was home to two more. More than $400 million in losses are projected as a result of the latest round of bank failures.
The mayhem began with the Office of the Comptroller of the Currency’s seizure of Independent National Bank in Ocala, Fla. When a federally insured bank fails, the Federal Deposit Insurance Corp. steps in as receiver, and this was the case with Independent. The OCC issued a cease-and-desist order against Independent in November 2009.
The OCC also shut down Community National Bank at Bartow in Bartow, Fla. In both cases, the OCC said “there is no reasonable prospect that the bank will become adequately capitalized without Federal assistance.” Community National was hit with an OCC cease-and-desist order in May.
CenterState Bank of Florida, National Association, stepped in to assume the deposits of both Independent National and Community National at par. It also acquired both banks’ assets, which collectively exceeded $200 million.
Calling Imperial Savings and Loan Association “critically undercapitalized,” the Office of Thrift Supervision closed the Martinsville, Va.-based institution. The bank, established nine months before the stock market crash in 1929, had just six employees and $9 million in assets.
Later in the day, the OTS took control of Los Padres Bank in the Danish-themed town of Solvang, Calif. Like with Imperial, the regulator said Los Padres was undercapitalized. The OTS issued a cease-and-desist order against Los Padres in October 2009.
Chicago’s ShoreBank failed, with the Illinois Department of Financial and Professional Regulation seizing the $2.2 billion institution. Urban Partnership Bank acquired all of the assets and assumed $1.54 billion in deposits at an 0.50 percent premium. The cost to the Deposit Insurance Fund is estimated at $368 million factoring in a $1.4 billion loss-sharing agreement with the FDIC — which issued cease-and-desist orders against the bank in March and in July 2009.
Next, the California Department of Financial Institutions shuttered Pacific State Bank, Sonoma Valley Bank and Butte Community Bank as a result of “inadequate capital and weakened financial condition.”
A cease-and-desist order was issued by the FDIC against Butte in May. Pacific State was hit with an FDIC prompt corrective action in July, while it entered a formal agreement with the FDIC in February. Both banks were acquired by Rabobank, National Association.
Sonoma Valley faced an FDIC cease-and-desist order in May and an FDIC Final Order in April.
The FDIC reports that 118 federally insured banks have failed so far this year.
