US real estate crash claims two more banks

July 28, 2008
US real estate crash claims two more banks

(WASHINGTON) The US Treasury has shut down two affiliated western
banks as the impact of the US real estate crash rolls through the
country's financial institutions.

Late last Friday, the Treasury's Office of the Comptroller of the
Currency took over First Heritage Bank of Newport Beach, California,
and First National Bank of Nevada, based in Reno, Nevada, declaring
both undercapitalised and facing losses that would wipe out their
capital.

'The 28 offices of the two banks will reopen on Monday as branches of
Mutual of Omaha Bank,' the Federal Deposit Insurance Corporation
(FDIC) said in a statement.

'All depositors, including those with deposits in excess of the
FDIC's insurance limits, will automatically become depositors of
Mutual of Omaha Bank for the full amount of their deposits.'

In addition to taking over the deposits, Mutual of Omaha Bank will
pay US$200 million for assets of the two closed banks, which are now
in receivership under FDIC control.

The closures took the number of banks closed in the country in the
past 18 months to 10 - due to the collapse of real estate prices, the
spread of mortgage defaults and the crumbling of the markets for
billions of dollars worth of securities tied to mortgages.

Earlier this month, the FDIC seized control of the large IndyMac
Bank, which was weakened by heavy exposure to risky sub-prime
mortgages and collapsed after a run by depositors.

Both the newly closed banks were owned by First National Bank Holding
Co of Scottsdale, Arizona.