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8 Failures Friday Brings 2010 Toll to 50

Last week's FDIC-insured bank failures

April 19, 2010

By Mortgage Daily staff


Federal and state bank regulators seized Friday eight financial institutions in five states with more than $6 billion in assets, impacting nearly 1,300 employees. Three of the failed banks were acquired by a Delaware institution. Despite the large number of failures for a single day, estimated losses to the nation's Deposit Insurance Fund from last week's failures are estimated at less than $1 billion. This year's federally insured bank failures have reached 50.

The first to fail was Lakeside Community Bank, which was closed by Michigan's Office of Financial and Insurance Regulation. The Federal Deposit Insurance Corporation was appointed receiver, as is done when any federally insured bank fails. But no buyer was found, and the institution was liquidated.

Sterling Heights, Mich.-based Lakeside faced an FDIC cease-and-desist order in November.

Next, AmericanFirst Bank was seized by the Florida Office of Financial Regulation, First Federal Bank of North Florida was closed by the Office of Thrift Supervision and Riverside National Bank of Florida was closed by the Office of the Comptroller of the Currency. All three failed institutions were acquired by Wilmington, Del.-based TD Bank, N.A., with the FDIC sharing in losses on $2.2 billion of the banks' assets.

AmericanFirst faced an FDIC prompt corrective action in February. The OTS, which issued a cease-and-desist order against First Federal in November, and the OCC -- which issued a cease-and-desist order against Riverside in November and entered a formal agreement a year earlier -- both noted that the two institutions had no chance of recovery without federal assistance.

The Massachusetts Division of Banks took possession of Butler Bank at 6 p.m. Eastern on Friday, calling the bank failure "an isolated occurrence." People's United Bank in Connecticut acquired the Lowell, Mass., institution -- with the FDIC sharing in losses on $206 million of the failed bank's assets. The FDIC issued a cease-and-desist order against Butler a year ago.

Citing "capital and weakened condition," the California Department of Financial Institutions closed Innovative Bank. Center Bank stepped in to assume all of the deposits for an 0.5 percent premium and acquire all assets from the FDIC -- which hit the Oakland, Calif.-based bank with a cease-and-desist order in March 2009. The FDIC's announcement was issued in English, Chinese and Korean.

After that, California's DFI seized Tamalpais Bank, also citing its weakened condition. Union Bank, N.A., picked up the deposits, also for a 2 percent premium, and acquired all of the San Rafael, Calif., bank's assets. Tamalpais faced an FDIC prompt corrective action in February and an FDIC cease-and-desist order in September 2009.

Friday's last and final bank failure was City Bank in Lynwood, Wash., which was closed by the Washington Department of Financial Institutions because of "inadequate capital and severe loan losses." Whidbey Island Bank agreed to assume all of the failed bank's deposits for a 1 percent premium and acquire all of its assets with a $456 million FDIC loss-sharing agreement.

City Bank's president and chief executive officer, Conrad Hanson, retired late last year and was planning to step down as chairman next month.

City Bank was the 50th FDIC-insured bank to fail so far during 2010. The last time this many federally insured banks were closed on a single day was on Oct. 30, 2009.

Friday's bank failures bring to 63 the number of mortgage-related closing tracked this year by MortgageDaily.com.


April 19, 2010 Bank Failures
Bank Location Regulator Deposits (mil) Deposit premium Assets (mil) Home Loans (mil) CRE Loans (mil) C&D (mil) Date Founded # Employees Acquirer FDIC Loss-Share Amount (mil) Deposit Insurance Fund Losses (mil)
Lakeside Community Bank Sterling Heights, Mich. Michigan Office of Financial and Insurance Regulation $52 0 $53 $9 $19 $5 1999 10 liquidated 0 $11
AmericanFirst Bank Clermont, Fla. Florida Office of Financial Regulation $82 0 $91 $7 $36 $19 2004 20 TD Bank, N.A. 0 $11
First Federal Bank of North Florida Palatka, Fla. Office of Thrift Supervision $324 0 $393 $205 $62 $42 1934 94 TD Bank, N.A. 0 $6
Riverside National Bank of Florida Fort Pierce, Fla. Office of the Comptroller of the Currency $2,760 0 $3,420 $802 $460 $194 1982 811 TD Bank, N.A. $2,200 $492
Butler Bank Lowell, Mass. Massachusetts Division of Banks $233 0 $268 $101 $36 $54 1986 58 People's United Bank $206 $23
Innovative Bank Oakland, Calif. California Department of Financial Institutions $225 0.50% $269 0 $121 $5 1982 78 Center Bank $178 $38
Tamalpais Bank San Rafael, Calif. California Department of Financial Institutions $488 2.00% $629 $41 $394 $52 1991 69 Union Bank, N.A. $522 $81
City Bank Lynnwood, Wash. Washington Department of Financial Institutions $1,020 1.00% $1,130 $43 $300 $234 1974 157 Whidbey Island Bank $456 $323
na na Total $5,184 na $6,253 $1,208 $1,428 605 na 1,297 na $3,562 $985

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