When National Bank of Nevada and First Heritage Bank NA of California opened their doors Monday, customers were surprised or, in some cases, overjoyed that their bank branches were now part of Mutual of Omaha Bank. The change happened over the weekend when federal regulators closed the two institutions, becoming the sixth and seventh banks to fail because of their involvement in the deepening mortgage crisis.
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Regulators brokered a deal to sell the 28 offices of the two small regional banks to Mutual Bank of Omaha. The two bank failures were relatively small in comparison to the IndyMac Bancorp failure. Regulators said National had total assets of
$3.4 billion and $3 billion in deposits while First Heritage, described as
critically undercapitalized, had assets of $254 million and $233
million in deposits. For comparison, IndyMac had $32 billion in assets and $19 billion in total deposits at the end of March. Here's a list of the other five banks that have failed this year:
- Gerald Magpily
See MSNBC bank failures
See TheDeal.com: FDIC seizes IndyMac
Comments
This is what Robert Sheridan of Robert Sheridan & Partners has said about the failure of Indymac and what's next for other banks:
The failure of Indymac Bank – according to The New York Times the largest lender to fail in more than two decades – can be laid squarely at the feet of the lax (or nearly non-existent) underwriting that is part of (a big part of) the sub-prime mess. The chickens simply came home to roost.
The troubles of Fannie Mae and Freddie Mac are quite different. Freddie and Fannie underwrote loans carefully; their difficulties are a result of the unprecedented decline of home values.
In 2006, going against the conventional wisdom that single-family home prices never decline (they might stop rising for awhile, but they never decline), we predicted that single-family prices could decrease 10 to 20 percent. Painfully, that forecast turned out to be very correct – but also optimistic. We’re in a cycle now in which housing declines already are greater than at any time since the Great Depression of the 30s. And we’re not at the bottom yet.
If you don’t want to be disappointed by housing performance in the near term, disregard forecasts that the bottom is just around the corner – unless that corner is in Timbuktu. The bottom is NOT coming soon. And when it does arrive, it will not be obvious, like the bottom in the chart of the DJIA. The housing “bottom†will become apparent only in the rear-view mirror, when you realize that prices have stopped falling. Don’t expect a sharp rebound.
We will stay at the bottom for quite a while. How long that lasts will vary, as always, market-by-market.
Bob posts every week so check in for the latest real estate and banking insight at
http://www.sheridanpartners.com/market.php
Robert Sheridan, the firm’s founder, was among the first proponents of apartment-to-condominium conversion back in the 1970s and has been a leader in the field since. His career includes a founding role and a co-chairmanship of the National Multi Housing Council.