by Bill McBride on 4/27/2009 09:28:00 AM
Monday, April 27, 2009
There have been two large payout bank seizures this month (as opposed to finding a buyer). The first was New Frontier Bank in Greeley, Colorado on April 10th, and the second was First Bank of Beverly Hills, California last Friday.
A former regulator told me that payouts are very rare except in rural areas (where there are no buyers). He told me:
These two recent payouts are kinda stunning. I can't stress how hard FDIC works to avoid payouts. They are highly disruptive to customers and quite expensive for the Agency. ... A payout is an operational nightmare for FDIC. ... It's a bigger and messier job than it might appear to anyone who hasn't been through it....that was a pretty story on 60 Minutes a while back, but that wasn't a payout. The pressure is incredible.From the Denver Post: Bank liquidation a blow to Greeley (ht David)
Greeley's largest bank was so larded with troubled assets that, for the first time in three decades, federal officials couldn't find another bank willing to do the liquidation. On April 10, they appointed themselves bank executives to hasten its demise.Pretty amazing story about a bank growing from a trailer in 1998 to $2 billion in assets this year.
"It's a phantom," said Fred Ozyp, the receivership specialist for the Federal Deposit Insurance Corp. heading the liquidation over the next two weeks.
The dream started in a double-wide trailer on Greeley's west side.First Bank of Beverly Hills had total assets of $1.5 billion. Two fairly sizable banks with no buyers.
It was 1998, and Seastrom, a former Eaton bank manager, decided to go into business for himself. He rounded up at least $6 million from investors and hung out the "New Frontier Bank" shingle on a mobile-home awning. The logo featured the company's initials at the center of a galaxy.
His lending universe: the growing housing market and sprawling agriculture industry of Weld County.