WASHINGTON (Reuters) - U.S. regulators took over two banks on Friday and sold them to Mutual of Omaha Bank, the sixth and seventh bank failures this year as financial institutions struggle with a housing bust and credit crunch. Two weeks after the Federal Deposit Insurance Corp seized IndyMac Bancorp Inc (Other OTC:IDMC.PK - News), the Office of the Comptroller of the Currency said it closed First National Bank of Nevada and First Heritage Bank NA of California.
First National had total assets of $3.4 billion and $3 billion in deposits while First Heritage had assets of $254 million and $233 million in deposits, regulators said.
The FDIC said the cost of the transactions to its insurance reserve is estimated to be $862 million, adding that the two failed banks represent just 0.3 percent of the $13.4 trillion in total industry assets at about 8,500 FDIC-insured institutions.
The FDIC said the 28 offices of the two banks will reopen on Monday as Mutual of Omaha Bank. Over the weekend, customers can access their money by writing checks, using automatic teller machines or debit cards.
Mutual of Omaha Bank currently has more than $750 million in assets and operates 14 retail branches in Nebraska and Colorado with commercial lending offices in Dallas and Des Moines, Iowa, the FDIC said.
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posted: Jul. 25, 2008 @ 10:20p
RS4Rings
Back in Rehab
posted: Jul. 26, 2008 @ 6:34a
At least even depositors with uninsured funds are fine, No one losing anything.
tolamapS
Senior Member - 2K
posted: Jul. 26, 2008 @ 7:08a
scott1961 said: At least even depositors with uninsured funds are fine, No one losing anything.
Also, I am curious how can depositors with uninsured be fine if FDIC has to pay money for shortfall?
elturn
Member
posted: Jul. 26, 2008 @ 7:15a
tolamapS said: scott1961 said: At least even depositors with uninsured funds are fine, No one losing anything.
Also, I am curious how can depositors with uninsured be fine if FDIC has to pay money for shortfall? According to the FDIC press release: Of the 10 institutions that have failed over the past two years, this is the second time in which another bank acquired all of the failing banks' insured and uninsured deposits. Mutual of Omaha Bank's acquisition of all deposits was the "least costly" resolution for the Deposit Insurance Fund compared to all alternatives because the expected losses to uninsured depositors were fully covered by the premium paid for the banks' franchises. Please don't ask me to explain what that means. I am just providing the quote.
ifyouhavetoask
Senior Member - 1K
posted: Jul. 26, 2008 @ 7:19a
tolamapS said: scott1961 said: At least even depositors with uninsured funds are fine, No one losing anything.
Also, I am curious how can depositors with uninsured be fine if FDIC has to pay money for shortfall?Mutual of Omaha paid a premium for the two banks, thus covering the uninsured deposits.
So, the answer to your question is: Mutual of Ohama's stupidity allowed uninsured depositors to escape unharmed.
ifyouhavetoask said: Mutual of Omaha paid a premium for the two banks, thus covering the uninsured deposits.
So, the answer to your question is: Mutual of Ohama's stupidity allowed uninsured depositors to escape unharmed.
Utter rubbish. It helps to know something about operations of finance industry, preferably somewhat from inside.
Banks have -operational- expenses. The operational expenses are covered from profits the bank generates from DDA/CDs/Savings/MMA accounts and other financial transactions it engages in. If a bank can't generate enough profits to keep its doors open and service the accounts regulators take over. The first thing the regulators will do is see if there is another bank that is willing to take over banks' book. In this case we had a situation where Mutual of Omaha not only was willing to take the book but branches ( i.e. operational expenses ) related to the book.
RS4Rings
Back in Rehab
posted: Jul. 26, 2008 @ 9:45a
EvilCapitalist said: ifyouhavetoask said: Mutual of Omaha paid a premium for the two banks, thus covering the uninsured deposits.
So, the answer to your question is: Mutual of Ohama's stupidity allowed uninsured depositors to escape unharmed.
Utter rubbish. It helps to know something about operations of finance industry, preferably somewhat from inside.
I know very little, But the one thing I do know is the people running Mutual of Ohama are not "stupid". No one put a gun to their head and forced them to do this and I'm sure they did not do this as a charity case. They have to figure this will benefit them down the road. The only I thing I do know is IYHTA is clueless
Absolut9
Senior Member
posted: Jul. 26, 2008 @ 9:47a
Sounds like an easy and quite possibly, cheaper way to expand their operations beyond Omaha and surrounding states to me. Not completely stupid at all.
ifyouhavetoask
Senior Member - 1K
posted: Jul. 26, 2008 @ 9:56a
scott1961 said: I know very little, But the one thing I do know is the people running Mutual of Ohama are not "stupid". No one put a gun to their head and forced them to do this and I'm sure they did not do this as a charity case. They have to figure this will benefit them down the road. The only I thing I do know is IYHTA is cluelessStupid? Don't take your dollar losses personally, Scott. They're not my fault
The probnlem is, Mutual of Omaha, like most other bankers, ARE stupid about this housing collapse. They're simply in denial about the crash, and how far it has to go.
The FDIC done found themselves a rube in Omaha
Come on, we're talking about Nevada real estate...and an Omaha bank The FDIC probably showed MoO execs a slideshow presentation of the LV Strip, along with a chart of LV real estate prices from 2000-2005 (2005-present currently unavailable)
NV real estate...especially LV...has 50% more downside from here. Maybe more. Banks holding that worthless junk on their books will be destroyed by eventually having to mark those assets to market. Currently, those real estate assests are marked to fantasy.
RS4Rings
Back in Rehab
posted: Jul. 26, 2008 @ 9:56a
I would think due to the current environment we are in Mutual of Ohama picked them up at a far lower cost than if things were not so messed up. The Fed does not want to pick up the cost of every failed bank. Just like how regulators allowed BoA to get Countrywide so easily, Doubt they would have approved that deal so easily a year or so ago.
RS4Rings
Back in Rehab
posted: Jul. 26, 2008 @ 10:01a
ifyouhavetoask said: Stupid? Don't take your dollar losses personally, Scott. They're not my fault
The probnlem is, Mutual of Omaha, like most other bankers, ARE stupid about this housing collapse. They're simply in denial about the crash, and how far it has to go.
So the only smart one who understands all this is you? How lucky we are to have someone with such knowledge spending her time here educating us dopes. Also have not lost a penny in many years
ifyouhavetoask
Senior Member - 1K
posted: Jul. 26, 2008 @ 10:05a
scott1961 said: I would think due to the current environment we are in Mutual of Ohama picked them up at a far lower cost than if things were not so messed up. The Fed does not want to pick up the cost of every failed bank. Just like how regulators allowed BoA to get Countrywide so easily, Doubt they would have approved that deal so easily a year or so ago.If you're impressed by those deals...wait a few months
The FDIC will be begging...anyone...to take over certain banks.
As soon as one of the bigger institutions fail, the dam will burst. The nightly news will have a daily "Today's Bank Failures" segment, complete with the standard FDIC reminder that the banking system is strong, that your money is safe, and that only wimps panic
Read some of the bank financial reports. 4 of the top 10 are flat-out dead in the water. Denial is the only thing keeping them alive at this point in time. The other 6 don't/won't have the ability to sop up the deluge of bad loans that's coming down the pike.
Right now, you could choose to short any of the top ten banks in the US, and make at least 10%-99% on your money in the next 12 months. This is literally the easiest money I've seen in the markets in my lifetime. It's certainly easier than the dot com scams. They were too small and easily manipulated to get a read on when they would crash. These big banks are too big to turn around. They're headed down, and nothing can stop it.
ifyouhavetoask said: Come on, we're talking about Nevada real estate...and an Omaha bank The FDIC probably showed MoO execs a slideshow presentation of the LV Strip, along with a chart of LV real estate prices from 2000-2005 (2005-present currently unavailable)
NV real estate...especially LV...has 50% more downside from here. Maybe more. Banks holding that worthless junk on their books will be destroyed by eventually having to mark those assets to market. Currently, those real estate assests are marked to fantasy.
From the Mutual of Omaha Bank Press Release: "Federal regulators on Friday declared First National Bank of Nevada and its affiliates insolvent and the FDIC was named receiver. The FDIC Board of Directors approved the assumption of more than $3 billion in deposits by Mutual of Omaha Bank. FDIC will retain most of First National's loan portfolio."
No pretty slides necessary! MoO got the upside without the downside. I guess the FDIC will try to make the loan book "pretty" and sell it off at some future point in time.
Stupid? Don't take your dollar losses personally, Scott. They're not my fault
No, the are not stupid, rather you are moron. It is spelled m-o-r-o-n. There is no fault in being one - they are needed for success of capitalism as it is their money that is separated from them.
ifyouhavetoask said: The probnlem is, Mutual of Omaha, like most other bankers, ARE stupid about this housing collapse. They're simply in denial about the crash, and how far it has to go.
Again, you are an idiot that does not undertand fundamentals of what FDIC did or what Mutual of Omaha did. Had you understood what FDIC does it would have been clear to you even from FDIC press release that banks' DDA books was not even neuteral ( which anyone with a clue would buy ) but profitable ( which anyone without much clue should buy).
andrewli said: [No pretty slides necessary! MoO got the upside without the downside. I guess the FDIC will try to make the loan book "pretty" and sell it off at some future point in time.
Wrong. Please refrain from posting on bank's books before understanding the difference between DDA book (that's what FDIC sold) and the rest of the operation.
ifyouhavetoask
Senior Member - 1K
posted: Jul. 26, 2008 @ 8:03p
andrewli said:
From the Mutual of Omaha Bank Press Release: "Federal regulators on Friday declared First National Bank of Nevada and its affiliates insolvent and the FDIC was named receiver. The FDIC Board of Directors approved the assumption of more than $3 billion in deposits by Mutual of Omaha Bank. FDIC will retain most of First National's loan portfolio."
No pretty slides necessary! MoO got the upside without the downside. I guess the FDIC will try to make the loan book "pretty" and sell it off at some future point in time.Mutual of Omaha's CEO made me laugh out loud today:
"Jeff Schmid, chairman and CEO of Mutual of Omaha Bank, said the acquisition of the new accounts aligns with the company's growth strategy to get aggressive with banking.
"We're very optimistic about these markets," said Schmid, who was in Scottsdale on Saturday to speak with his new employees. "This could be our finest hour."
The FDIC must have photos of him and his secretary in Cancun
Who's going to take over Washington Mutual? Maybe the 4th National Bank of Grassy Creek, Texas???
Again, this is a profitable transaction that anyone with a sane operation would make.
It is unfortunate that you don not understand why buying a book of another bank for the face value of a book is profitable. Most likely it is because you never ran a business so you do not understand that it costs money to acquire customers.
DDA book of WAMU is profitable. It may not profitable enough to carry the rest of the WAMU but pretending that DDA book of WAMU, Citi or any other bank in the US is not profitable is equivalent of smoking crack in front of a police station.
ifyouhavetoask said: scott1961 said: I know very little, But the one thing I do know is the people running Mutual of Ohama are not "stupid". No one put a gun to their head and forced them to do this and I'm sure they did not do this as a charity case. They have to figure this will benefit them down the road. The only I thing I do know is IYHTA is cluelessStupid? Don't take your dollar losses personally, Scott. They're not my fault
The probnlem is, Mutual of Omaha, like most other bankers, ARE stupid about this housing collapse. They're simply in denial about the crash, and how far it has to go.
The FDIC done found themselves a rube in Omaha
Come on, we're talking about Nevada real estate...and an Omaha bank The FDIC probably showed MoO execs a slideshow presentation of the LV Strip, along with a chart of LV real estate prices from 2000-2005 (2005-present currently unavailable)
NV real estate...especially LV...has 50% more downside from here. Maybe more. Banks holding that worthless junk on their books will be destroyed by eventually having to mark those assets to market. Currently, those real estate assests are marked to fantasy.
four smiley/stupid faces in the post --- this creates a presumption that you have nothing intelligent to say
Another TWO bailouts by that heinous liberal institution the FDIC. It's enough to make an honest republican's blood boil, I should think. Or maybe I just don't quite understand when government charity through debt is ok, and when it isn't.
Bear Stearns - weekend Indy Mac - weekend FNB NV and Heritage Bank of CA - weekend
Whats the deal?
sushiosushi
Senior Member - 2K
posted: Jul. 27, 2008 @ 12:54a
RedCelicaGT said: I see a trend here.
Bear Stearns - weekend Indy Mac - weekend FNB NV and Heritage Bank of CA - weekend
Whats the deal?
FDIC takeovers are typically announced by the FDIC via press releases late Friday afternoon and branches are closed over the weekend. They reopen on Monday as part of the new bank that took over the deposits.
EricGo07 said: Or maybe I just don't quite understand when government charity through debt is ok, and when it isn't. Do you know how the FDIC works? 'Cause I'm tired of ignorant comments like this....
loganj
Member
posted: Jul. 27, 2008 @ 8:18p
Regarding Mutual of Omaha's acquisition...I live near Omaha and have read about Mutual of Omaha's bank startup. The bank only began in 2007 and they wanted to expand it. I'd imagine this is a relatively great opportunity to expand...acquire a bank in a weekend for less than what it was just a few weeks/months ago.
The Omaha newspaper sheds some light on the acquisition.
Schmid said his bank intends eventually to operate in 15 to 20 states and grow into a $10 billion to $20 billion franchise within 10 years. He said entering fast-growing markets such as the Southwest was critical to Mutual.
EricGo07 said: Another TWO bailouts by that heinous liberal institution the FDIC. It's enough to make an honest republican's blood boil, I should think. Or maybe I just don't quite understand when government charity through debt is ok, and when it isn't. Do you understand how the FDIC works? It sorta kinda gives people confidence in the banking system. Without the FDIC I bet you would see a panic right now at a lot of banks and that could collapse our financial system.
EricGo07 said: Another TWO bailouts by that heinous liberal institution the FDIC. It's enough to make an honest republican's blood boil, I should think. Or maybe I just don't quite understand when government charity through debt is ok, and when it isn't.
Another TWO examples of the FDIC (Federal Deposit Insurance Corp.) doing its JOB of Insuring Deposits.
EricGo07 said: Another TWO bailouts by that heinous liberal institution the FDIC. It's enough to make an honest republican's blood boil, I should think. Or maybe I just don't quite understand when government charity through debt is ok, and when it isn't.
Do me a favor...just take a guess at what the "I" in FDIC stands for.
Also...I have a completely unrelated question. If you buy a new car and total it, your insurance company will pay to have it replaced. Do you consider that to be a bailout? Just wondering.
OK. Unrelated questions aside, lets get back to your original question. http://www.fdic.gov/about/learn/symbol/index.html
The FDIC receives no Congressional appropriations – it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities.
Frankly, I took the post that inspired all these comments as sarcasm/irony, but thought the above links were noteworthy, regardless.
silam
Senior Member
posted: Jul. 28, 2008 @ 3:11p
ifyouhavetoask said: If you're impressed by those deals...wait a few months
The FDIC will be begging...anyone...to take over certain banks.
As soon as one of the bigger institutions fail, the dam will burst. The nightly news will have a daily "Today's Bank Failures" segment, complete with the standard FDIC reminder that the banking system is strong, that your money is safe, and that only wimps panic
Read some of the bank financial reports. 4 of the top 10 are flat-out dead in the water. Denial is the only thing keeping them alive at this point in time. The other 6 don't/won't have the ability to sop up the deluge of bad loans that's coming down the pike.
Right now, you could choose to short any of the top ten banks in the US, and make at least 10%-99% on your money in the next 12 months. This is literally the easiest money I've seen in the markets in my lifetime. It's certainly easier than the dot com scams. They were too small and easily manipulated to get a read on when they would crash. These big banks are too big to turn around. They're headed down, and nothing can stop it.
How the hell are you a senior member? I hope you have a california king mattress since thats where it seems all your money is. I guess you have plenty of cash on hand for your world war III bomb shelter and spam storage room though.
You can make money going short and long on banks now (depends on your research abilities, your magic 8-ball, and your time frame). But if you think you can open multiple short positions now and just sit and hold it for 12 months and hit huge returns (with volatility like it is, this has to be north of 10%) I think you are in for an eye opener.
Active trading in financials can get you there though, but that is off subject...
Does anyone now the mechanics by which FDIC gets deposit insurance funds?
Is it a spread collected over all deposits at member banks on a recurring basis?
FDIC said they have something like $50 B in insurance funds. I imagine an annualized spread of 10 bp levied on all deposits over a long period of time can add up to a lot money.
E.g., 1 Trillion in deposits, 10 bp per year, say for 30 years, and you get 30 B, without the compounding effect of the accrued funds. Assuming they could invest these in treasuries, they can get more money. Of course, this does not account for draw-downs, but for a long period of time, there were no large ones.
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