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Feds Seize Two More Banks

Mutual of Omaha takes over accounts of failed banks

July 26, 2008

The Federal Deposit Insurance Corp. (FDIC) took over the banks' assets and sold their accounts to Mutual of Omaha Bank.

"We would first like to reassure all customers of First National Bank of Nevada and First Heritage Bank that all their deposits are safe and accessible," Jeffrey R. Schmid, Mutual of Omaha Bank's chairman and chief executive, said. "Their deposits will automatically transition to Mutual of Omaha Bank and we will be open for business on Monday morning."

Mutual of Omaha Bank is owned by the insurer of the same name. It operates 14 retail branches in Nebraska and Colorado and has said it plans to open community banks in fast-growing markets where it has an existing base of insurance customers.

Seven banks have failed so far this year, including IndyMac, the Pasadena, Calif.-based mortgage lender taken over by the FDIC earlier this month.

The Office of the Comptroller of the Currency (OCC), which regulates national banks, seized the two institutions late Friday and appointed the FDIC as receiver.

The OCC said the First National Bank of Nevada, whose primary markets extended throughout Nevada and Arizona, had about $3.4 billion in assets and was chartered as a national bank in 1987. On June 30, 2008, an affiliate of the bank, known as the First National Bank of Arizona, Scottsdale, Arizona, was merged into First National Bank of Nevada.

The OCC said it acted after finding that the bank was undercapitalized and had experienced substantial dissipation of assets and earnings due to "unsafe and unsound practices." The OCC also found that the bank had incurred losses that would its capital.

First Heritage Bank had about $250 million in assets and was chartered as a national bank in 2005. The OCC said it acted after finding that the bank was critically undercapitalized.

Like the much larger IndyMac, First National Bank of Arizona was an aggressive mortgage lender, writing loans throughout much of the U.S., even after the market began to weaken. Much of its business was reportedly in second mortgages, which are considered riskier than first mortgages.

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