NBH Holdings Buys Failed Bank, Six More Shut as Toll This Year Reaches 139

NBH Holdings Corp., a Boston-based private-equity group, purchased a failed bank in Kansas and real-estate losses crippled six others as the number of U.S. lenders to collapse this year climbed to 139.

NBH Holdings purchased the $1.54 billion in deposits of Overland Park, Kansas-based Hillcrest Bank through a newly chartered bank of the same name, according to a statement on the website of the Federal Deposit Insurance Corp. Banking officials closed lenders with a combined $2.4 billion in assets this week, costing the agency’s deposit-insurance fund $478 million.

“Our interest is in banks that expand our footprint in community banking in key markets and give us a strong and stable platform for growth,” NBH Chief Executive Officer Tim Laney said in a statement. “We want to bring secure and reliable community banking back to customers, with the level of service and quality of products that people want and deserve from their local banks.”

Banks are closing at a faster pace than last year, which saw the most failures since 1992, as real estate values remain depressed. Regulators closed 140 banks last year. The FDIC’s list of “problem” banks climbed to 829 lenders with $403 billion in assets at the end of the second quarter, a 7 percent increase from the 775 on the list in the first quarter.

NBH is run by former Citizens Financial Group executives, who raised more than $1 billion last year, with a plan of becoming a publicly traded company, according to the statement. NBH retained Goldman Sachs Group Inc. and Wachtell, Lipton, Rosen & Katz as advisers.

Hillcrest

In buying Hillcrest, NBH gets nine regular bank branches in four states and 32 offices that provide banking services to residents of assisted-living facilities, according to the company statement. Hillcrest will be merged with Bank Midwest, which NBH purchased from Dickinson Financial Corp.

Regulators closed two lenders each in Florida and Georgia, among the states hardest hit by the banking crisis. First National Bank of Barnesville and Gordon Bank, of Gordon, became the 15th and 16th lenders to fail in Georgia this year. Morris Bank of Dublin, Georgia, paid a 0.05 percent premium to the FDIC to acquire almost $27 million in deposits from Gordon.

Progress Bank of Florida and First Bank of Jacksonville became the 26th and 27th banks closed in Florida this year. Bay Cities Bank of Tampa purchased Progress Bank, while Moultrie, Georgia-based Ameris Bancorp acquired First Bank of Jacksonville.

The Office of Thrift Supervision closed Scottsdale, Arizona-based First Arizona Savings, according to a statement. The FDIC was unable to find a buyer for just under $200 million in deposits and $272.2 million in assets. First Suburban National Bank, of Maywood, Illinois, also collapsed. Its operations were sold to Chicago-based Seaway Bank & Trust Co.

Earlier this week, the FDIC board approved a plan for replenishing funds drained by bank failures. The board voted 5-0 on Oct. 19 for a proposal to restore the deposit-insurance fund, which sat at a negative $15.2 billion balance in the second quarter. FDIC-member banks pay quarterly fees to the agency for an insurance fund that guarantees deposits of as much as $250,000 per account when lenders are shut down.

To contact the reporter on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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