Bank Failures to Cost Over $500 mil

In Olathe, Kan., the Office of Thrift Supervision shuttered Security Savings Bank, F.S.B. The regulator said the 54-year-old bank was undercapitalized and had “no reasonable prospect of becoming adequately capitalized.”

As is always the case with federally insured bank failures, the 108-employee institution was handed over to the Federal Deposit Insurance Corp. as receiver. A bidding process landed $397 million in deposits from the failed bank at Simmons First National Bank, which paid no premium for the deposits. Simmons also acquired Security’s $508 million in assets — including $99 million in home loans, $162 million in commercial real estate loans and $72 million in construction-and-development loans — with the FDIC agreeing to cover some of the losses on $334 million of the assets.

The estimated cost to the Deposit Insurance Fund as a result of Security’s collapse is $82 million.

Not far away, in Chesterfield, Mo., the Missouri Division of Finance took possession of WestBridge Bank & Trust Co. The state blamed aggressive lending for WestBridge’s demise, noting that many of its $19 million in C&D  loans became uncollectible. No buyers were found for the bank, leading to its seizure.

All of WestBridge’s $73 million in deposits were assumed by Midland States Bank at par. Midland also picked up the bank’s $92 million in assets, including $9 million in residential loans and $22 million in commercial mortgages, with the FDIC sharing in losses on $73 million. FDIC losses were projected at $19 million.

WestBridge started business in 2006. At the time of its demise, around a dozen people were employed. In December 2009. parent WestBridge Bancshares Inc. applied with the Federal Reserve Bank of St. Louis to acquire 100 percent of WestBridge Bank’s voting shares. It faced an FDIC cease-and-desist order in January 2009.

Last, but certainly not least, was Premier Bank — which the Missouri Division of Finance closed down. The state cited the same reasoning that it cited in WestBridge’s closure.

Jefferson City, Mo.-based Premier was founded in 1995. Headcount stood at 193 at the end of June. Parent Premier Bancshares Inc. was forced to enter a written agreement with the Federal Reserve Board in March 2009, while the bank itself faced an FDIC civil money penalty the prior year.

Providence Bank won its FDIC bid to assume Premier’s $1.03 billion in deposits at par and acquire its $1.18 billion in assets — including $117 million in one- to four-unit mortgages, $301 million in commercial mortgages and $338 million in C&D loans. The FDIC agreed to a loss-sharing arrangement on $409 million of the assets, brining the estimated cost to the Deposit Insurance Fund to $407 million.

So far this year, 132 FDIC-insured banks have failed. A total of 164 mortgage-related failures and closing have been tracked by Mortgage Daily so far this year.

Two bridge corporate credit unions were created by the National Credit Union Administration to assume the operations of failed U.S. Central Corporate Federal Credit Union and Western Corporate Federal Credit Union. The newly created institutions — U.S. Central Bridge Corporate Federal Credit Union and Western Bridge Corporate Federal Credit Union — will assume the “good” assets of the failed credit unions.

The bridge entities will not offer any new service offerings. They will limit new loans to being used primarily for settlement purposes and service existing loans. No new members will be accepted by the organizations.