At the close of business on Friday, April 24, 2009, the California Department of Financial Institutions closed First Bank of Beverly Hills in Calabasas, CA and appointed the U.S. Federal Deposit Insurance Corp. (FDIC) receiver.
On Thursday, CoStar Group, reported that Beverly Hills Bancorp Inc., the holding company for First Bank of Beverly Hills, and Orchard First Source Asset Management LLC terminated a merger agreement announced last month to merge OFS's lending subsidiary into First Bank of Beverly Hills; and CoStar put the bank on its Bank Watch list.
The failed deal was a critical step in Beverly Hills Bancorp's continuing attempts to keep federal regulators from taking further actions against it.
First Bank of Beverly Hills is the 28th FDIC-insured institution to fail this year and the fourth in California.
The FDIC estimates the cost of the failure to its deposit insurance fund to be approximately $394 million.
In February, the FDIC and the California Department of Financial Institutions jointly issued First Bank of Beverly Hills a cease and desist order.
The order required the bank to either increase its regulatory capital by at least $70 million or enter into a definitive merger agreement within 60 days.
First Bank of Beverly Hills, which tags its web site as "commercial and apartment real estate lending," has $1.5 billion in assets and a real estate loan portfolio of $841.2 million of which 80% is backed by multifamily and income producing properties.
As of year-end 2008, First Bank of Beverly Hills had $58.8 million in nonperforming and foreclosed real estate assets of which about $15.5 million was commercial real estate.
Since year-end, the bank holding company has decided to add $37.8 million to the bank's allowance for loan losses and record impairment charges of $44.8 million against certain securities, primarily private-label mortgage-backed securities.
The additional loan loss allowance primarily resulted from a reduction in valuations on the residential construction and land portfolios, and a weakening economy and real estate market.
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