Feds Seize Banks In Arizona, California, Nevada; Is Florida Next?

Federal regulators were busy in three states on Friday afternoon shutting down two banks with $4.6 billion in assets and 28 locations in the distressed real estate markets of Arizona, California, and Nevada.

Regulators seized the First National Bank Holding Co. in Scottsdale, Ariz, the parent company of First Heritage Bank in Newport Beach, Calif., and the First National Bank of Nevada in Reno, Nev.

The First National Bank of Arizona merged with the First National Bank of Nevada on June 30, only to be shutdown 25 days later.

The estimated cost of the failure of First National Bank of Nevada and First Heritage Bank is projected to be $862 million, according to the Federal Deposit Insurance Corp, which guarantees deposits up to $100,000 per account.

In preparation of the seizure of the First National Bank of Nevada and the First Heritage Bank in Southern California, the FDIC entered into a purchase and assumption agreement for all of the deposits and certain assets to be sold to Mutual of Omaha Bank in Omaha, Neb., according to regulators.

The former First National Bank of Nevada and First Heritage Bank locations will be open for business on Monday morning as Mutual of Omaha Bank. Temporary signage will cover the original bank names until permanent monikers can be put in place.

Under the agreement with regulators, Mutual of Omaha Banks, which has assets of $738 million and a single location, will guarantee depositors their full amount.

"Mutual of Omaha Bank will also purchase approximately $200 million of assets from the receiverships," according to an FDIC statement. "Mutual of Omaha Bank will pay the FDIC a premium of 4.41 percent to assume all the deposits. The FDIC will retain the remaining assets for later disposition."

The seizure of the First National Bank of Nevada and the First Heritage Bank marks the sixth and seventh institutions to be shutdown by federal regulators in 2008.

Two weeks ago on July 11, federal regulators shut down IndyMac Bank, a $32 billion institution based in Pasadena, Calif. The estimate cost of that seizure is between $4 billion and $8 billion, according to the FDIC.

Before IndyMac, regulators seized Minnesota-based First Integrity Bank with $54.7 million in total assets and $50.3 million in total deposits on May 30; Arkansas-based ANB Financial with $2.1 billion in total assets and $1.8 billion in total deposits on May 9; Missouri-based Hume Bank with total assets of $18.7 million and total deposits of $13.6 million on March 7; and Missouri-based Douglas National Bank with $58.5 million in total assets and $53.8 million in total deposits on January 25, according to the FDIC.The last Nevada institution to be shuttered by regulators was Frontier Savings Association in Las Vegas on December 14, 1990 during the Savings and Loan crisis, according to the FDIC.

A Florida bank has not been seized since March 12, 2004, when regulators took over Guaranty National Bank of Tallahassee, which had assets of $74.1 million.

First National Bank Holding Co. was the largest Arizona-based institution with 1,072 employees, 38 locations, total deposits of $3.4 billion, and assets of $4.6 billion on March 31, according to the FDIC.

Founded in May 1989 in Scottsdale, Ariz., the First National Bank of Arizona merged into the First National Bank of Nevada on June 30. At the time of the merger, the First National Bank of Arizona employed 839 people, operated 28 locations, and had assets of $2.8 billion and deposits of $1.9 billion, according to regulators.

The First National Bank of Nevada, which was founded in July 1987 in Reno, employed 210 employees throughout 10 locations, and had assets of $1.6 billion and deposits of $1.4 billion through March 31, 2008, according to the FDIC.

In February 2005, First Heritage Bank was created in Southern California to focus on business banking and commercial lending.

First Heritage Bank had built up $159 million in total assets and $136 million in total deposits through March 31. The nationally chartered institution had 27 employees working from three offices located in Los Angeles, Orange, and San Bernardino counties at the time of the FDIC's seizure.

Peter Zalewski is a principal with the consulting company Condo Vultures® LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter's blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report.

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