Regulators shut the doors on Carson River Community Bank in Carson City, Nevada and Rainier Pacific Bank in Tacoma, Washington over the weekend. So far in 2010, 22 FDIC-insured institutions have landed on the agency's ""failed bank list"":http://www.fdic.gov/bank/individual/failed/banklist.html.
[IMAGE]A separate FDIC list holds the names of banks the federal agency considers to be at-risk of failure. As ""DSNews.com reported last week"":http://dsnews.comarticles/fdic-labels-702-banks-as-problem-2010-02-23, this ""problem list"" grew 27 percent from the third to fourth quarters of last year, to 702 â€" a daunting indication that the FDIC is expecting another year of elevated failures. During the 2009 calendar year, 140 insured institutions went under.
""Carson River Community Bank"":http://www.carsonrivercb.com, was acquired by ""Heritage Bank of Nevada"":http://www.HeritageBankNevada.com in Reno. The single-branch Carson River Bank had $50 million in deposits and approximately $51 million in assets.
Heritage Bank did not pay the FDIC a premium for the deposits. In addition, Heritage Bank agreed to purchase approximately $38 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition. The FDIC and Heritage Bank of Nevada entered into a loss-share transaction on $28.5 million of Carson River Community Bank's assets.
[COLUMN_BREAK]According to the Nevada Department of Business and Industry, Financial Institutions Division (FID), inadequate capital and mounting loan losses made it necessary to close Carson River Community Bank. ""We are committed to making sure Nevada's banking system continues to be fundamentally safe and sound,"" said FID Commissioner George E. Burns.
The FDIC estimates the failure to cost its deposit insurance fund $7.9 million. Carson River Community Bank is the first institution to be closed in Nevada this year.
Tacoma's ""Rainier Pacific Bank"":http://www.rainierpac.com operated 14 branches, with $446.2 million in deposits and $717.8 million in total assets. ""Umpqua Bank"":http://www.umpquabank.com of Roseburg, Oregon agreed to take over the failed Rainier Pacific.
Umpqua Bank will pay the FDIC a premium of 1.04 percent to assume all of the deposits. Umpqua Bank also agreed to purchase approximately $670.1 million in assets. The FDIC will retain the remaining assets for later disposition. The FDIC and Umpqua Bank entered into a loss-share agreement on $578.1 million of Rainier Pacific Bank's assets.
According to the _Seattle Times_, the 77-year old Rainier Pacific Bank was brought down by investment deals gone bad. The local paper said Rainier made large and ill-timed investments in complex securities called trust preferred collateralized debt obligations (CDOs) - bundles of debt issued by banks and insurance companies, similar to the instruments at the root of the financial meltdown.
After the market for such securities evaporated, the _Seattle Times_ explained that accounting rules forced Rainier to write down their value and wiped out the bank's capital reserves. According to the paper, Rainier's portfolio of CDOs, originally valued at $108.8 million, was worth just $17.1 million at year's end.
The FDIC expects Rainier Pacific's closure to cost it an estimated $95.2 million. Rainier is the fourth institution in Washington state to collapse this year.