WASHINGTON — For the second time in two days, Valley National Bank in Wayne, N.J., picked up a small failed New York-based bank, $520.1 million-asset The Park Avenue Bank.
Valley National paid the Federal Deposit Insurance Corp. a premium of 0.15% to assume all of Park Avenue's $494.5 million of deposits and essentially all of its assets. The FDIC and Valley National entered into a loss-sharing agreement on $379.8 million of the bank's assets.
The Friday failure came only a day after Valley National bought the remains of failed $210 million-asset LibertyPointe Bank of New York. The two failed institutions were apparently shopped by the FDIC as a package deal, but LibertyPointe was closed a day early to avoid conflicting with the Jewish Sabbath.
State regulators said they closed Park Avenue because it was undercapitalized and had failed to live up to the terms of a Feb. 11, 2009 cease and desist order.
"We determined that the management team's inability to adequately address the problems outlined in the consent order led to the bank being critically undercapitalized. This issue, coupled with the high volume of non-performing loans held by Park Avenue, meant the bank could no longer operate in a safe and sound manner," said Richard Neiman, the New York State Banking Superintendent, in a press release.
The FDIC estimated the failure will cost the Deposit Insurance Fund $50.7 million.