Bank Failure – Mirae Bank
NOTE: On April 27, 2009 the FDIC issued a Cease and Desist order:
ORDER TO CEASE AND DESIST IT IS HEREBY ORDERED, pursuant to Section 1913 of the Financial Code and Section 8(b) of the Act, 12 U.S.C., that the Bank, its institution-affiliated parties, as that term is defined in section 3(u) of the Act, 12 U.S.C. § 1813(u), and its successors and assigns, cease and desist from the following unsafe and unsound banking practices: operating with inadequate capital in relation to the kind and quality of assets held by the Bank; operating with a large volume of poor quality loans; operating with an inadequate allowance for loan and lease losses (“Allowanceâ€); operating in such a manner as to produce operating losses; and operating with inadequate provisions for liquidity.
Now just two months later the FDIC had to step in and shut them down. Keep an eye on the Cease and Desist list I posted last night. By the way, Mirae Bank was on that list!
From the FDIC:
Mirae Bank, Los Angeles, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Wilshire State Bank, Los Angeles, California, to assume all of the deposits of Mirae Bank.
The five offices of Mirae Bank will reopen on Monday as branches of Wilshire State Bank. Depositors of Mirae Bank will automatically become depositors of Wilshire State Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until Wilshire State Bank can fully integrate the deposit records of Mirae Bank.
Over the weekend, depositors of Mirae Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.
As of May 29, 2009, Mirae Bank had total assets of $456 million and total deposits of approximately $362 million. In addition to assuming all of the deposits of the failed bank, Wilshire State Bank agreed to purchase approximately $449 million of assets. The FDIC will retain the remaining assets for later disposition.
The FDIC and Wilshire State Bank entered into a loss-share transaction on approximately $341 million of Mirae’s assets. Wilshire State Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.
Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-930-1848. The phone number will be operational this evening until 9:00 p.m., Pacific Daylight Time (PDT); on Saturday from 9:00 a.m. to 6:00 p.m., PDT; on Sunday from noon to 6:00 p.m., PDT; and thereafter from 8:00 a.m. to 8:00 p.m., PDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/mirae.html.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $50 million. Wilshire State Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives. Mirae Bank is the 45th FDIC-insured institution to fail in the nation this year, and the sixth in California. The last FDIC-insured institution to be closed in the state was MetroPacific Bank, Irvine, earlier today.
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