Its parent group, First National Bank Holding Company, based out of Scottsdale, Ariz., was also closed.
The banks’ deposits have been purchased by Mutual of Omaha, and clients will not lose any money and will see a smooth transition, according to the FDIC.
A combination of the downturn in the economy and the bank’s various loans played a role in the bank’s closure, said Kevin Mukri, a spokesman for the Comptroller of the Currency, the federal agency that oversees banks.
“Banks fail. They fail in bad economic times and good economic times,” Mukri said. “It depends on how a bank executes its business plan.”
The closure adds fear to an already concerned market. Stress should continue on the real estate industry, banks’ non-performing assets are increasing, consumers are still going to have trouble, and that could spell continuing difficulty for banks, said Delta Global Advisors senior strategist Michael Pento.
“We will have less foreclosures than one might think, but it still doesn’t help banking on a whole,” Pento said.
Mukri downplayed the closure in terms of the overall banking system, saying the vast majority of banks are “doing just fine.”
“Oftentimes, when there is a bank failure, there is a bank buyer right away,” Mukri said. “That is another good sign of how banking is. Even though there is bank failure, some of the bank or a lot of the bank is operating just fine.”
Newport Beach Chamber of Commerce President Richard Luehrs reiterated some of the confidence Mukri had in the system. While some banks may lose out due to their business practices, others may be winning when they take over a company and make it stronger, Luehrs said.
