Regulators Shut Doors on Four Banks

Last Monday came and went without the typical weekly news of several FDIC-assisted bank closures, but the reprieve was short-lived. This weekend, regulators shut down four institutions â€" one each in California, Florida, Illinois, and Texas.

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These latest bring the number of ""failures on the FDIC's list"":http://www.fdic.gov/bank/individual/failed/banklist.html to 20 for the year. And nearly all of the crashes have been linked in some way to bad mortgages or construction and development lending.

As ""DSNews.com previously reported"":http://dsnews.comarticles/tarp-watchdog-says-small-banks-cre-losses-could-hit-300-billion-2010-02-12, the Congressional Oversight Panel charged with tracking the government's bailout efforts, estimates that banks' losses from defaults on commercial real estate loans alone over the next few years could go as high as $300 billion and threaten to bury the balance sheets of nearly 3,000 community banks nationwide.

This past weekend, the Office of Thrift Supervision (OTS) shuttered ""La Jolla Bank, FSB"":http://www.ljbank.com in La Jolla, California. The _San Diego Business Journal_ reported that La Jolla Bank had been operating under a cease and desist order from the OTS since September, requiring the bank to raise more capital. At that time, the publication said, La Jolla Bank reported $401.6 million in problem loans, as well as $45 million in foreclosed real estate.

The FDIC brokered a deal with ""OneWest Bank"":http://www.owb.com in Pasadena to take over La Jolla Bank's $2.8 billion in deposits and reopen its ten branches. One West, which was formed to take over IndyMac Bank when it collapsed, also agreed to purchase ""essentially all"" of La Jolla Bank's $3.6 billion

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in assets, $3.3 billion of which the FDIC agreed to share losses on. The California bank's failure is expected to cost the FDIC $882.3 million.

State and federal regulators showed up in Marco Island, Florida Friday evening, along with their typical entourage of law enforcement officers, to shut down the single-branch ""Marco Community Bank"":http://www.marcocommunitybank.com. The FDIC immediately entered into an agreement with ""Mutual of Omaha Bank"":http://www.mutualofomahabank.com in Nebraska to assume the failed institution's $117 million in deposits for a 1.5 percent premium.

Mutual of Omaha also purchased Marco Community's $119.6 million in loans and assets. The FDIC has agreed to share in the losses on $104.8 million of the acquired assets. The agency estimates that the cost of the closure will cost it another $38 million.

""George Washington Savings Bank"":http://www.gwsbank.com, which set up shop in Orland Park, Illinois in 1889, was also shut down. ""FirstMerit Bank"":http://www.firstmerit.com of Akron, Ohio stepped in to take over its four branches, and its $395 million in deposits for a 0.31 percent premium.

FirstMerit also purchased all of George Washington Savings' $412 million in assets. According to the _Chicago Tribune_, of its $305 million in loans, about $125 million were seriously delinquent at the end of 2009. The FDIC has agreed to share losses with FirstMerit on approximately $342 million of the acquired assets. The resolution of George Washington Savings is estimated to cost the FDIC $141 million.

In La Coste, Texas, ""The La Coste National Bank"":http://www.lacostenb.com was also seized by regulators, and immediately acquired by ""Community National Bank"":http://www.cnbanktx.com of Hondo, Texas. Community National took over the failed bank's single branch with $49.3 million in deposits, for which Community National paid a 0.51 percent premium. Community National also purchased all of La Coste National's $53.9 million in assets.

_TheStreet_ reported that La Coste National Bank's failure was the result of ""fraudulent activity,"" citing an Office of the Comptroller of the Currency official. The FDIC expects the Texas bank's collapse to cost its deposit insurance fund $3.7 million. It's the first bank in the Lone Star State to go under this year.