Also This Week: Comptroller Requiring Mexican-Owned Bank in Texas To Step Up Risk Management
The California Department of Financial Institutions closed San Joaquin Bank in Bakersfield, CA, and appointed the Federal Deposit Insurance Corp. (FDIC) as Receiver.
The FDIC then agreed to sell most of its assets to Citizens Business Bank, which also assumed most of the deposit liabilities, with the exception of Cede & Co. brokered deposits, of San Joaquin Bank.
As of Sept. 29, San Joaquin Bank had total assets of $775 million and total deposits of approximately $631 million. Citizens Business Bank did not pay the FDIC a premium for the deposits of San Joaquin Bank.
The FDIC and Citizens Business Bank entered into a loss-share transaction on approximately $683 million of San Joaquin Bank's assets. Citizens Business Bank will share in the losses on the asset pools covered under the loss-share agreement.
Two weeks ago, Watch List reported that The Federal Reserve Board hit San Joaquin Bank with "Prompt Corrective Action Directive" either to increase its equity through the sale of shares or contributions or be sold to another insured depository institution by Oct. 15.
In the first half of the year, San Joaquin Bank had lost $19.8 million. As of June 30, it reported that about $100 million in loans were listed as nonperforming. About 10% of the nonperforming amount was related to commercial income producing properties. Among the bank's assets, it listed $14 million in bank-owned premises.
Comptroller Requiring Mexican-Owned Bank in Texas To Step Up Risk Management
The U.S. Comptroller of the Currency entered into a formal written agreement with Inter National Bank in McAllen, TX, after finding "unsafe and unsound banking practices relating to increasing credit risk at the bank."
The written action plan includes steps to improve the bank's loan portfolio management, eliminate some "criticized assets" including other real estate owned, and review the adequacy of the bank's allowance for loan and lease losses.
Banorte Financial Group (Grupo Financiero Banorte, Mexico's fourth largest bank) owns 100% of INB Financial Corp., the bank holding company for Inter National Bank.
Inter National Bank reported net income in the first half of the year of $3.1 million, a 75.6% year-over-year decline.
The bank holds an investment portfolio of mortgage backed securities, which showed an 8.6% year-over-year contraction. Past due loans registered a 321.4% year-over-year increase mainly due to higher mortgage delinquencies.
Inter National reported about $17.1 million in nonperforming commercial property assets, including $2.25 million in foreclosed properties. Its foreclosed CRE holdings include a 6,933-square-foot office building at 800 W. San Houston in McAllen valued at $1 million.
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