Saturday January 24, 2009
Navivest

Yesterday evening, the FDIC announced that the California Department of Financial Institutions had shut down 1st Centennial Bank of Redlands, California and that the FDIC had been named as receiver.

The FDIC has entered into a purchase and assumption agreement with First California Bank of Westlake Village, California, which will assume the insured deposits of 1st Centennial at a 5.29% premium.
First California Bank will also purchase approximately $293 million of the failed bank’s assets. The assets are comprised mainly of cash, cash equivalents and marketable securities. The FDIC is retaining the remaining assets for later disposition.

As a result of that purchase and assumption agreement, the six branches of 1st Centennial will reopen on Monday as branches of First California Bank. Depositors of the failed bank will automatically become depositors of First California and their deposits will continue to be insured by the FDIC.

1st Centennial had total assets of $803.3 million and total deposits of $676.9 million as of January 9, 2009.

The FDIC estimates that the failure of 1st Centennial will cost the FDIC’s Deposit Insurance Fund $227 million.

1st Centennial becomes the third bank to fail this year, after Bank of Clark County of Vancouver, WA, which went under on January 16, and National Bank of Commerce of Berkeley, IL, which also failed on January 16.

As the credit crisis continues to pick up steam and the economy worsens, the rate of bank failures is increasing. In 2008, there were 25 bank failures. In 2007, there were only three, and no bank failures in 2006 and 2005. With the three bank failures so far in 2009, we are on pace for 36 bank failures this year, but we expect we will see a higher number as things go from bad to worse, before they get better.

tags: Bank Failure  1st Centennial Bank  Credit Crisis  Economy