WASHINGTON — Regulators seized five banks in as many states Friday, bringing the 2010 failure total to nine.
For the first time, a private-equity buyer was allowed to use a so-called "shelf" charter to buy a failed bank. The target was Premier American Bank, a $350 million-asset bank in Miami, and the buyer was Bond Street Bank, a wholly owned subsidiary of Bond Street Holdings LLC, a Delaware limited liability company.
The Office of the Comptroller of the Currency granted Bond Street a shelf charter on Oct. 23; the agency announced in 2008 it was creating these charters to help nonbank buyers bid for failing banks.
"This transaction creates an important new template for assisted deals," said Kip Weissman, a partner at Luse Gorman law firm in Washington, D.C. "This transaction could mark the beginning of an important trend, particularly in areas like Detroit where there are few depository institution bidders."
Bond Street agreed to purchase all of Premier's deposits ($326.3 million) and assets ($351 million), but it entered into a loss-sharing agreement with the Federal Deposit Insurance Corp. on $300 million of the failed bank's assets.
The FDIC said it assumed a "cash participant instrument" that will give the agency a cut of appreciation in the stock of the acquiring institution. The FDIC estimated Premier's failure would cost the Deposit Insurance Fund $85 million.
The biggest bank to fail on Friday was the $1.2 billion asset Charter Bank of Santa Fe, N.M. It was bought by Charter Bank of Albuquerque, N.M., a newly chartered federal savings bank and subsidiary of Beal Financial Corp. of Plano, Texas.
The FDIC entered into a loss-sharing deal with Beal on $805.5 million of the thrift's assets. The FDIC estimated the failure's cost at $201.9 million. It was the first failure in New Mexico since 1999.
Right behind Charter Bank, size-wise, was Columbia River Bank of Dalles, Ore., which had $1.1 billion in assets. It is being acquired by Columbia State Bank of Tacoma, Wash. The FDIC entered into a loss-sharing agreement on $697.4 million of Columbia River's assets. Columbia State agreed to pay a 1% premium for Columbia River's $1 billion in deposits. The FDIC estimated the failure's cost $172.5 million.
Also in the Pacific Northwest, the $488.5 million-asset Evergreen Bank of Seattle failed and was bought by Umpqua Bank of Roseburg, Ore. The FDIC and Umpqua signed a loss-sharing agreement on $379.5 million of Evergreen's $488.5 million in assets. The FDIC also took a cash participant instrument in this deal. Umpqua agreed to pay a 1% premium to acquire $439.4 million of the failed bank's deposits. The FDIC estimated Evergreen's failure would cost $64.2 million.
The smallest failure of the night was the $20.1 million-asset Bank of Leeton of Leeton, Mo., which was sold to Sunflower Bank NA of Salina, Kan. The FDIC estimated the cost at $8.1 million. Sunflower agreed to pay the FDIC a premium of 0.59% for the deposits, which totaled $20.4 million.
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