Bank Failures: Consequences Of Expansion
By ROBIN SIDEL and DAMIAN PALETTA (Wall Street Journal Online
July 28, 2008
The latest bank failures as the industry slogs through its worst crisis in a generation are showing the consequences of the frenetic expansion that took place when times were good.
The latest example came late Friday, when federal regulators shut down First National Bank of Nevada, based in Reno, and First Heritage Bank of Newport Beach, Calif. The $3.2 billion in deposits of the closed banks were acquired by Mutual of Omaha Bank, a unit of insurer Mutual of Omaha. The branches are reopening Monday.
The two failed banks were units of closely held First National Bank Holding Co., based in Scottsdale, Ariz
. Both had been grappling with problem loans and had a combined first-quarter loss of about $140 million. First National Bank of Arizona, which was absorbed into First National Bank of Nevada
in June, had a first-quarter loan-loss provision of $95.9 million. [...]
It ain't over. More will come. I'm just sayin', is all.