Regulators announced last week the closing of a California bank, marking the state's first insured bank collapse in more than two and a half years.
The Office of the Comptroller of the Currency (OCC) closed down the Palm Desert-based Frontier Bank—also known as El Paseo Bank—citing a lack of assets and earnings "due to unsafe and unsound practices." The agency also found the bank was "likely to incur losses that will deplete its capital, the bank is significantly undercapitalized, and there is no reasonable prospect that the bank will become adequately capitalized."
The latest closing brings the nationwide tally of collapsed banks to 17 so far this year compared to 23 by this time in 2013. Annual closings reached 157 as recently as 2010, the worst year for banks since the savings and loan crisis.
Frontier Bank is also the first insured institution to fall in California since April 2012, when Palm Desert National Bank went down.
OCC appointed FDIC as receiver of Frontier Bank's deposits and assets, which were estimated to total $82.1 million and $86.4 million, respectively, as of June 30. As receiver, FDIC announced an agreement with San Diego's Bank of Southern California, which will pay a premium of 1.06 percent to acquire all of the failed bank's deposits.
The estimated cost to FDIC's Deposit Insurance Fund will be $4.7 million, the agency said.