A 124-year-old bank was taken over by federal banking regulators last week. More than $100 million in losses are expected from the institution’s demise.
Late Friday, the Office of the Comptroller of the Currency closed The First National Bank of Olathe.
The Olathe, Kan.-based bank “experienced substantial dissipation of assets and earnings due to unsafe and unsound practices,” prompting the OCC to step in.
“The OCC also found that the bank incurred losses that depleted its capital, the bank is critically undercapitalized, and there is no reasonable prospect that the bank will become adequately capitalized without federal assistance,” the national bank regulator said.
First National was originally established in 1887. As of March, 111 people were employed there. The company owned $45 million in residential mortgages, $135 million in commercial real estate loans and $105 million in construction-and-land-development loans.
The OCC, which entered a formal agreement with the bank in January 2009, named the Federal Deposit Insurance Corp. as receiver.
Following a secret bidding process, the FDIC awarded the failed bank’s $524 million in total deposits as of June 30 to Enterprise Bank & Trust for a 1.5 percent premium.
All of First National’s $538 million in total assets were acquired by Enterprise, but the FDIC had to agree to share in losses on $420 million of the assets.
The Deposit Insurance Fund is expected to be depleted by $117 million as a result of First National’s failure — the 64th FDIC-insured failure during 2011.
Mortgage Daily has tracked 91 mortgage-related operations to close or fail during 2011.