Regulators seized three banks on Friday, bringing the toll of failed banks for the year to 123. As always, we've updated our list of failed banks.
One of the banks that was closed on Friday was a TARP recipient: Pacific Coast National Bank of San Clemente, Calif., received $4.1 million in taxpayer funds in January. That investment, made through the Treasury Department's program to invest in "healthy banks," will be wiped out.
It's the third TARP recipient to topple this month. Last week also was tough for two companies the government recently deemed "healthy" and thus worthy of TARP money. CIT declared bankruptcy, wiping out the government's $2.33 billion investment, and regulators closed United Commercial Bank, wiping out another $299 million.
Last month, we reported that all three institutions were foundering, raising questions about how they'd been approved for government money meant for only "healthy banks."
Only a few months after Pacific Coast received the TARP investment in January, the bank announced that its loan portfolio, especially construction and commercial real estate loans, had deteriorated significantly. The bank warned that its portfolio would sink even more if Southern California's real estate market continued to plummet. Soon, regulators criticized the bank for "unsafe and unsound practices" and ordered it to raise capital. But it was too late. Regulators seized the bank, according to Friday night's announcement, because there was "no reasonable prospect that the bank will become adequately capitalized without additional federal assistance."
The FDIC struck a deal with Sunwest Bank of Tustin, Calif., to assume Pacific Coast's deposits and assets. Pacific Coast had only two branches. The failure will cost the FDIC $27.4 million.
The other two banks seized on Friday were in Florida. The failure of Orion Bank of Naples, a community bank with 23 branches, will cost the FDIC $615 million. Century Bank of Sarasota will cost the FDIC $344 million. IberiaBank of Louisiana assumed all the deposits and part of the assets of each.