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Failed, closed and a c q u i r e d mortgage-related entities.



Huge FDIC Losses from 7 Bank Failures Friday

Recent mortgage-related closings

May 3, 2010

By MortgageDaily.com staff


Seven bank failures Friday are expected to cost the Federal Deposit Insurance Corporation in excess of $7 billion -- more than the losses from the failure of Washington Mutual Bank, Colonial Bank or IndyMac Bank. Collectively, Friday's failures impacted more than 4,000 employees.

The first to go was Eurobank in San Juan, P.R., which was seized by the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico and handed over to the FDIC -- as is done when any federally insured bank fails. All of Eurobank's $1.97 billion in deposits were assumed by Oriental Bank and Trust for a 1.25 percent premium, while Oriental also acquired all of the failed bank's $2.56 billion in assets. After sharing in losses on $1.58 billion of the assets, the FDIC -- which issued a cease-and-desist order against Eurobank in October 2009 -- expects to lose $744 million as a result of its failure.

Next, Puerto Rico closed R-G Premier Bank of Puerto Rico -- which had nearly $6 billion in assets. Scotiabank de Puerto Rico won the bidding process for the bank. The failure is expected to cost the Deposit Insurance Fund $1.2 billion after factoring in a $5.4 billion FDIC loss-share agreement. R-G was hit with an FDIC cease-and-desist order in October.

Friday's most costly failure was Westernbank Puerto Rico, which was closed down by the Puerto Rican bank regulator and sold to Banco Popular de Puerto Rico. After agreeing to a loss-sharing arrangement on nearly $9 billion in assets, the FDIC -- which issued a cease-and-desist order against Westernbank in May 2009 -- pegged related losses at more than $3 billion.

The Federal Reserve Board announced Friday that it had approved Banco Popular's acquisition of Westernbank pursuant to emergency provisions of the Bank Merger Act.

The activity then moved to Michigan, where the Michigan Office of Financial and Insurance Regulation seized CF Bancorp. First Michigan Bank picked up all of CF's $1.43 billion in deposits, though it only acquired $0.9 billion of CF's $1.65 billion in assets, with the FDIC sharing in losses on most of the assets. Related losses are estimated at $615 million. The FDIC issued a cease-and-desist order against CF in February.

Following CF's closure, the Missouri Division of Finance shuttered Champion Bank, which was sold off to BankLiberty. Missouri blamed "imprudent lending decisions made in high-risk, out-of-territory loans" for the bank's demise.

After finding that BC National Banks had seen its assets and earnings evaporate as a result of unsafe and unsound practices, the Office of the Comptroller of the Currency closed the Butler, Mo.-based bank. The OCC hit BC with a cease-and-desist order in February 2009. Community First Bank picked up all of BC's assets and deposits. The FDIC expects to lose just $11 million from BC's failure.

Moving to the West Coast, the Washington Department of Financial Institutions shut down Frontier Bank, which had "inadequate capital and severe loan losses." The FDIC, which issued a cease-and-desist order against Frontier in March 2009, has projected associated costs to the Deposit Insurance Fund at $1.37 billion.

Frontier was the 64th FDIC-insured bank to fail this year and the 81st mortgage-related closing tracked by MortgageDaily.com.

In all, the FDIC projected $7.3 billion in losses from all of Friday's bank failures -- higher than $6 billion in losses previously projected for IndyMac Bank FSB's failure, $5 billion in Deposit Insurance Fund Costs as a result of BankUnited's demise and the $3 billion lost as a result of Guaranty Bank's collapse. Losses from Colonial's failure were estimated at nearly $3 billion, while FDIC losses from the collapse of WaMu -- the biggest bank failure in U.S. history -- were expected to be zero.

April 30, 2010 Bank Failures
Bank Location Regulator Deposits (mil) Deposit prem. paid Assets (mil) Home Loans (mil) CRE Loans (mil) C&D (mil) Year Founded # Emp Acquirer FDIC Loss-Share Amount (mil) Deposit Ins. Fund Losses (mil)
BC National Banks Butler, Mo. OCC $55 0.00% $67 $10 $17 $1 1902 34 Community First Bank $38 $11
CF Bancorp Port Huron, Mich. Michigan Office of Financial and Insurance Regulation $1,430 0.75% $1,650 $530 $389 $125 1937 362 First Michigan Bank $808 $615
Champion Bank Creve Coeur, Mo. Missouri Division of Finance $154 0.00% $187 $33 $57 $45 2006 33 BankLiberty $114 $53
Eurobank San Juan, P.R. Commissioner of Financial Institutions of the Commonwealth of Puerto Rico $1,970 1.25% $2,560 $254 $570 $286 1980 450 Oriental Bank and Trust $1,580 $744
Frontier Bank Everett, Wash. Washington Department of Financial Institutions $3,130 0.00% $3,500 $341 $1,159 $1,054 1978 697 Union Bank, N.A. $3,400 $1,370
R-G Premier Bank of Puerto Rico Hato Rey, P.R. Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico 4250 1.35% 5,920 $3,023 $933 $954 1983 1,213 Scotiabank de Puerto Rico $5,410 $1,230
Westernbank Puerto Rico Mayaguez, P.R. Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico $8,620 0.00% $11,940 $1,522 $5,015 $1,237 1958 1,452 Banco Popular de Puerto Rico $8,770 $3,310
Bank Location Regulator Deposits (mil) Deposit prem. paid Assets (mil) Home Loans (mil) CRE Loans (mil) C&D (mil) Year Founded # Emp Acquirer FDIC Loss-Share Amount (mil) Deposit Ins. Fund Losses (mil)

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