Not Everybody Loses on Bank Failure Friday
Three more banks failed on Friday, bringing the year's total to 133. The FDIC estimates Friday's failures will cost its insurance fund a combined $252.1 million. While the failures represent another hit to the FDIC's depleted fund, they are a boon to three companies that acquired the assets and deposits of the closed institutions.
The first to go for the day was Republic Federal Bank of Miami, Fla. The bank had total assets of approximately $433 million and deposits of approximately $352.7 million. 1st United Bank of Boca Raton assumed all the deposits of the failed bank, paying the FDIC a premium of 1.2 percent for them. It also purchased $267.1 million of the failed bank's assets, including loans, cash and marketable investment securities.
The South Florida Business Journal reports that in November the parent of 1st United was the first bank in Florida to pay back its TARP loan. On Dec. 8, a special meeting of shareholders of 1st United Bancorp also voted to increase shares in the company to raise money for acquisitions. There should be plenty more failed institutions to buy in South Florida, a region where small banks are now reeling from the consequences of aggressive lending into a real estate bubble.
Next to go was Valley Capital Bank of Mesa, Ariz. As of Sept. 30, Valley Capital had total assets of approximately $40.3 million and total deposits of approximately $41.3 million. The FDIC sold the deposits to Enterprise Bank & Trust of Clayton, Mo., at a 2 percent premium. Enterprise also agreed to purchase most of the failed bank's assets.
While Valley Capital had only one branch, its acquisition allows Enterprise, with $2.5 billion in assets, a valuable entry into the Arizona market. Last year, Enterprise tried to open a bank in Arizona but state regulators had stopped issuing new charters because of the economy, the St. Louis Post-Dispatch reports.
The last failure of the evening was 122-year-old SolutionsBank of Overland Park, Kan. As of Sept. 30, SolutionsBank had total assets of $511.1 million and total deposits of approximately $421.3 million. Arvest Bank of Fayetteville, Ark., assumed all of the deposits of SolutionsBank without paying a premium to the FDIC.
Arvest is owned by the family of Wal-Mart Stores Inc. founder Sam Walton. It has twice bid unsuccessfully for failed banks in an effort to break into the Kansas City market, The Kansas City Star reports. With 220 branches spread over Oklahoma, Kansas, Missouri and Arkansas, Arvest is already a regional player that, thanks to the misfortunes of others, just got a bit bigger.
As big banks return their TARP money, Fannie Mae and Freddie Mac continue to be a drain.