90 Bank Failures at Six Month Mark. 140 banks failed in 2009, and at this pace, it appears the number will be higher.
The 15 branches of Home National Bank, Blackwell, Oklahoma were closed with RCB Bank, Claremore, Oklahoma, to assume all of the deposits. Established December 21, 1933, the bank had 174 full time employees, but 190 full time employees March 31, 2009, and had branches in Oklahoma, Kansas and Arizona.
Home National’s troubled asset ratio was a staggering 272% compared to the national average of 15%. The large majority of failed banks in the recent past have had troubled asset ratios exceeding 100%.
Equity had dropped from $77.8 million March 31, 2009 to $19.1 million with $68.4 million in non-current loans. The bank had reported profits of $2.3 million March 31, 2009 and $908,000 March 31, 2010, one of the very few banks in the last two years to report a profit, but fail.
Charge offs were $1.6 million which included $1 million in commercial and industrial loans, $560,000 in construction and land development. Tier 1 risk-based capital ratio 3.51%.
In a separate transaction with the FDIC, Enterprise Bank & Trust, Clayton, Missouri agreed to purchase approximately $260.8 million of Home National Bank's assets. The FDIC will retain the remaining assets for later disposition. The FDIC and Enterprise Bank & Trust entered into a loss-share transaction on $260.8 million of Home National Bank's assets purchased from the FDIC. Enterprise Bank & Trust will share in the losses on the asset pools covered under the loss-share agreement.
As of March 31, 2010, Home National Bank had approximately $644.5 million in total assets and $560.7 million in total deposits. RCB Bank paid the FDIC a premium of 0.22 percent for the deposits of Home National Bank. In addition to assuming the deposits, RCB Bank agreed to purchase approximately $340.7 million of the failed bank's assets.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $78.7 million.
Two Baltimore Banks:
The Federal Deposit Insurance Corporation (FDIC) approved the payout of the insured deposits of Ideal Federal Savings Bank, Baltimore, Maryland. The bank was closed today by the Office of Thrift Supervision, which appointed the FDIC as receiver. It had two full time employees.
The bank was formed April 4, 1920, historically a brave move, especially since its main purpose was to provide mortgage loans to Blacks. It started when Black could not get a mortgage from white bankers, and was among the oldest Black-owned businesses in the country.
Yvonne Lansey was president. She succeeded her father, E. Gaines Lansey, Sr., as bank president in 1988. She was the third generation of the family to run the bank. It was originally open only two hours a week, on Thursday nights, the one day a week domestic workers had off from work.
The bank never grew, but served its community in its special niche. Reportedly the bank did not have an ATM machine and was struggling without having current technology. Ideal Federal Savings Bank became an FDIC insured institution on 1986.
"The highest risk of failures now are among smaller, locally based institutions," said Greg McBride, senior financial analyst at Bankrate.com told the Baltimore Sun. "If the biggest employer in town goes out of business, all of a sudden a lot of loans on the bank's books can go bad in a hurry. And that's a common theme that plays out every Friday night across America, when several more institutions shut their doors for the last time."
Bank equity March 31, 2009 was $386,000 and $260,000 March 31, 2010. Ideal Federal Savings had lost $273,000 the prior period and $22,000 March 31, 2009. It had no charge offs, but $528,000 in non-current loans. Tier 1 risk-based capital ratio 6.40%
The FDIC was unable to find another financial institution to take over the banking operations of Ideal Federal Savings Bank. As of March 31, 2010, Ideal Federal Savings Bank had approximately $6.3 million in total assets and $5.8 million in total deposits.
The cost to the FDIC's Deposit Insurance Fund is estimated to be $2.1 million.
The two branches of Bay National Bank, Baltimore, Maryland were closed with Bay Bank, FSB, Lutherville, Maryland, to assume all of the deposits. One branch was located at 2328 West Joppa Road, Baltimore, and the other, 109 Poplar Hill Avenue, Salisbury.
Banking analyst Bert Ely told the Baltimore Sun, “Bay National most likely failed because of problem loans in the areas of construction development for single- and multifamily residences and other construction projects, as well as home mortgage loans and some commercial real estate loans.
"This is a bank that had a relatively high level of nonperforming assets," Ely said. "And the regulators concluded they wouldn't be able to raise the capital to keep the bank well-capitalized. This is the kind of thing we're seeing around the country."
In an interview with The Baltimore Sun last year, Bay National executives blamed the troubles on the collapse of the real estate market. Bay National had extended mortgages to investors hoping to renovate homes and sell them. Many of the homes were around Baltimore's ritzy Inner Harbor. But housing values dropped, and investors were unable to sell the houses.
Stuart Greenberg, a private banker based in Baltimore, said Bay National had been heading toward a failure for months.
"They got greedy, they got stupid, they got arrogant," Greenberg said. "They started doing some loans they never should have been doing. It eventually catches up with you."
As of March 31, 2010, Bay National Bank had approximately $282.2 million in total assets and $276.1 million in total deposits. It had gone from 49 full time employees in March 31, 2009 to 36 full time employees March 31, 2010 with bank equity going from $22.1 million to $4.9 million in the same period with non-current loans at $24.39 million, losing $743,000 in March 31,2009 and $2.6 million in March 31, 2010, following $2.6 million in charge offs ( $657,000 construction and land development, $1.5 million in 1-4 multifamily residential property, and $363,000 loss to loans that are non-US addresses, plus $108,000 to individuals.) Tier 1 risk-based capital ratio 2.45%.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $17.4 million
Full story on Both Banks from Baltimore Sun:
Port Chester, New York Bank Closes
The sole branch of USA Bank, Port Chester, New York was closed with New Century Bank (doing business as Customer's 1st Bank), Phoenixville, Pennsylvania, to assume all of the deposits. The young bank established 2005 had gone from 37 full time employees to 28 full time employees. 1st Bank hired former Sovereign Bancorp head Jay Sidhu as chairman and CEO last year. It perhaps has a goal to expand in the New York area. USA Bank serviced Port Chester and Greenwich, Connecticut (I attended grammar school and first year of junior high in the village of Port Chester).
As of March 31, 2010, the failed bank had approximately $193.3 million in total assets and $189.9 million in total deposits. Bank equity had dropped from $15.4 million March 31, 2009 to $2.5 million with $69 million in non-current loans from $11.6 the period before. The bank had lost $826,000 and this time period $3.1 million. Tier 1 risk-based capital ratio 2.21%.
The FDIC and New Century Bank entered into a loss-share transaction on $159.1 million of the failed bank's assets.
New Century Bank will share in the losses on the asset pools covered under the loss-share agreement.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $61.7 million.
Full Story of problems with USA Bank:
List of Bank Failures:
Disclosure: No Position