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ShoreBank, the bank which is considered to be the first community development and environmental bank of the United States was closed down on August 20, 2010. The bank was seized by the Federal Deposit Insurance Corp and the Urban Partnership Bank agreed to take over the bank with all its deposits and assets. The two institutions have mutually agreed to share the losses worth USD 1.41 billion as well.
The Urban Partnership Bank is backed by some of the most reputed financial institutions not only in American but across the globe. The investors of the bank include – Bank of America Corp, Citigroup, Goldman Sachs, JP Morgan Chase, American Express, Morgan Stanley, Northern Trust, Wells Fargo and GE Capital Equity Investments.
FDIC has taken over the ShoreBank with assets worth USD 2.16 billion and deposits worth USD 1.54 billion. Besides the Shorebank, the FDIC has also initiated the closure of seven other banks across the United States. After the closure of these eight banks, this year’s total for number of bank failures across the United States would have touched 118.
During the second quarter of this year, the ShoreBank registered a loss of USD 39.5 million. It had managed to raise USD 146 million in capital from Goldman Sachs, General Electric, JPMorgan Chase and Citigroup over the last one year, but was unable to get a bail out from the US treasury.
The Urban Partnership bank intends to carry on the legacy of the ShoreBank and has assured that it will continue supporting distressed neighbourhoods and offering financial services to help them to transition into a strong and stable community.
The failure of this reputed bank which has been operational for more than three decades since 1973 is expected to cost the FDIC close to USD 367.7 million.
Seven other banks were closed down on August 20, 2010 as well.
Two banks in California, Butte Community Bank, Chico (Assets = USD 498.8 million, Cost of failure = USD 16.4 million) and Pacific State Bank, Stockton (Assets = USD 312.1 million, Cost of failure = USD 32.6 million), have been taken over by Rabobank Nederland NV at a premium of 4.05 percent.
The office of the Comptroller of the Currency also closed two banks in Florida, Community National Bank (Assets = USD 67.9 million, Cost of failure = USD 10.3 million) at Bartow and Independent National Bank (Assets = USD 156.2 million, Cost of failure = USD 23.2 million) of Ocala. These two banks have five combined branches which were taken over by Centerstate Banks Inc, Davenport.
Another bank in California, Sonoma Valley Bank (Assets = USD 337.1 million, Cost of failure = USD 10.1 million), Sonoma, was taken over by Westamerica Bancorporation.
The Los Padres Bank (Assets = USD 870.4 million, Cost of failure = USD 8.7 million) of Solvang in California was closed down and taken over by PacWest Bancorp at a 0.45 percent premium for USD 770.7 million.
Last, but not the least, Imperial Savings and Loan Association (Assets = USD 9.4 million, Cost of failure = USD 3.5 million) in Virginia was acquired by the River Community Bank.
These financial impediments clearly indicate that the United States is still reeling under the pressure of the economic recession and no signs of recovery can be seen in the near future. The FDIC had close to 755 banks with assets worth USD 431 billion listed as problem lenders as on March 31, 2010.
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