New Mexico bank failure is the state’s first in more than a decade
January 23rd, 2010 - 3:46 pm ICT by BNO NewsSANTA FE, NEW MEXICO (BNO NEWS) — Federal regulators on Friday closed the Charter Bank in Santa Fe, New Mexico, marking the seventh U.S. bank failure of 2010 following an economic turbulent year that saw more than one hundred U.S. banks fail.
The Charter Bank was closed by the state’s Office of Thrift Supervision after its regular closing time on Friday. The Federal Deposit Insurance Corporation (FDIC) was appointed as receiver following its closure, who immediately entered into a purchase and assumption agreement with the Albuquerque-based Charter Bank, a newly-chartered national institution and a subsidiary of Beal Financial Corporation, to assume all of the failed bank’s deposits.
Charter Bank had eight branches in the area.
Most, if not all customers, should see no or little service disruptions despite the closure of the institution. On Monday, the eight branches of the Charter Bank will reopen during their normal business hours as a branch of Beal Financial Corp.’s Charter Bank.
All of the failed bank’s services, including checks, ATM and debit cards, will remain active. “Checks drawn on the bank will continue to be processed,” the FDIC said in a statement. “Loan customers should continue to make their payments as usual.”
As of September of last year, the Charter Bank had approximately $1.2 billion in total assets and $851.5 million in total deposits. Beal Financial Corp.’s Charter Bank did not pay the FDIC a premium to assume the deposits of Charter Bank, the FDIC said. “In addition to assuming all of the deposits of the failed bank, Charter Bank agreed to purchase essentially all of the assets.”
The FDIC and Beal Financial Corp.’s Charter Bank entered into a loss-share transaction on approximately $805.5 million of Charter Bank’s assets. Beal Financial Corp.’s Charter Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers.
The FDIC said it estimates that the cost to the Deposit Insurance Fund (DIF) will be $201.9 million. It said Beal Financial Corp.’s acquisition of the deposits was the “least costly” resolution.
Friday’s closure was not only the seventh U.S. bank failure of 2010 but was also New Mexico’s first bank failure in more than a decade. Regulators closed Zia New Mexico, based in Tucumcari, on April 23, 1999.
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