Monday, March 29, 2010

Desert Hills Bank shut down by federal regulators

Desert Hills Bank shut down by federal regulators

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Desert Hills Bank, one of the largest banks headquartered in Arizona, was shut down by banking regulators Friday. New York Community Bank assumed all Desert Hills' deposits, which remain federally insured.

Desert Hills' six branches will reopen on Monday as branches of New York Community Bank, which last year took over the Arizona branches of Ohio-based Amtrust Bank when it went under.

Desert Hills was closed by the Arizona Department of Financial Institutions. The Federal Deposit Insurance Corporation was named receiver.

Desert Hills, with $426 million of Arizona deposits at the end of 2009, lost $8.8 million and had a "tier-1" capital ratio of just 4 percent, one of the lowest in the state.

It was among the 20 largest banks in Arizona in terms of deposits and among the three or four biggest bank firms based here.

Customers can access their money over the weekend by writing checks or using ATM or debit cards. Loan customers should continue making payments as usual.

New York Community Bank didn't pay a premium to assume Desert Hills' deposits and agreed to buy virtually all assets. The FDIC and New York Community will share losses on some loans.

Desert Hills is the 41st bank to fail so far in 2010 and the first in Arizona.

The FDIC estimates the failure will cost its insurance fund $107 million.

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