Despite having private-equity commitments, the $2 billion-asset United Western Bank in Denver failed Friday.
The Denver thrift was the largest of four seized institutions that brought the year's total number of failures to seven. Regulators also closed banks in the Carolinas and Georgia in a busy night that also saw a shelf charter and a deposit insurance national bank utilized.
Collectively, the four banks represented $2.7 billion in assets and are expected to cost the Federal Deposit Insurance Fund $455 million.
Last October , United Western Bancorp Inc. announced that it had received as much as $103 million of capital commitments from private-equity firms Lovell Minnick Partners LLC and Oak Hill Capital Management LLC to invest up to $47 million each. Another $9 million was expected from Henry "Ric" Duques, the controlling owner of Legent Group LLC, the parent of Legent Clearing LLC, a company that United Western announced in June 2010 that it would buy. All three investments, however, were hinged on the company raising another $100 million from other sources.
By November, the company said it was working with the Office of Thrift Supervision on write-downs on its private-label mortgage-backed securities portfolio. In December, it announced that its thrift was undercapitalized at Sept. 30 after a $16.3 million other-than-temporary charge on the securities.
Late Friday, United Western Bancorp said in a press release it had $149 million of capital commitments and "strong indications of interest in excess of $70 million."
"We were making steady progress with regard to completing our capital formation efforts and were within sight of the completion of our $200 million raise," said Guy A. Gibson, United Western's chairman and chief executive. "This precipitous action by the OTS and the FDIC will ultimately cause an unnecessary loss to the Deposit Insurance Fund, since our private market solution was near at hand. Our solution would have avoided any loss to the Deposit Insurance Fund and spared the industry millions of dollars of additional assessments now required to cover this cost to the Deposit Insurance Fund."
Its failure is expected to cost the Deposit Insurance Fund $312.8 million.
First Citizens Bank in Raleigh, N.C., entered into an agreement with the Federal Deposit Insurance Corp. to buy United Western Bank's assets, with $1.1 billion of those assets covered in a loss-sharing agreement. The $21 billion-asset First Citizens also agreed to assume the thrift's $1.65 billion in deposits without paying a premium.
Earlier in the evening, the Georgia Department of Banking and Finance closed the $100.9 million-asset Enterprise Banking Co. in McDonough but the FDIC was unable to find a buyer. Instead, the FDIC established a deposit insurance bank, a rarely used tool designed to avoid mass payouts by giving depositors time to shop for a new bank.
The FDIC has used such a method just a handful of times in the past 30 years. In the current economic cycle, it was employed for winding down the $828 million-asset Barnes Banking Co. in Kaysville, Utah, in January 2010 and the $2 billion-asset New Frontier Bank in Greeley, Colo., in April 2009.
Deposit Insurance National Bank of McDonough will remain open until Jan. 28. The FDIC will retain all of the assets for later disposition. The bank had $95.5 million in deposits and its failure is expected to cost the deposit insurance fund $39.6 million.
The South Carolina State Board of Financial Institutions closed the $440.6 million-asset CommunitySouth Bank and Trust in Easley. The bank was sold to CertusBank, a newly chartered bank owned by Blue Ridge Holdings Inc. in Charlotte.
Blue Ridge, which is led by Milton Jones, a former Bank of America Corp. regional president, was granted a shelf charter by the Office of the Comptroller of the Currency in October. The venture is reportedly backed by $500 million of capital from various investors.
CertusBank assumed all of CommunitySouth's $402.4 million deposits without paying a premium. It also agreed to buy essentially all of its assets and entered into a loss-share agreement on $211.3 million of the assets.
CommunitySouth's failure is expected to cost the Deposit Insurance Fund $46.3 million.
In North Carolina, the Office of Commissioner of Banks shuttered The Bank of Asheville. First Bank in Troy, N.C., agreed to assume the failed bank's $188.3 million in deposits at face value. First Bank also agreed to buy the bank's $195.1 million in assets, with $166.3 million of the assets covered by a loss-share agreement.
The Bank of Asheville's failure is expected to cost the Deposit Insurance Fund $56.2 million.