The first bank failure in the state of Texas occurred today when the Texas Department of Banking closed First International Bank, Plano, Texas. The FDIC, appointed as receiver for the failed bank, sold First International to American First National Bank of Houston, Texas.
Ironically, First International Bank’s origins were based on a failed bank. First International Bank was chartered in 1991 to take over the failed First National Bank of Bedford from the FDIC. The Bank prided itself on serving a multicultural clientele and had employees who spoke numerous foreign languages.
First International Bank expanded rapidly during the lending boom, opening three additional branches in Texas and three in Nevada. All seven branches of the failed bank will reopen on Saturday as branches of American First National Bank.
First International Bank aggressively expanded its lending activities during the real estate boom and assets almost doubled between 2005 and 2009. When the real estate market crashed, Nevada property values collapsed and nonperforming loans increased dramatically which caused First International to become critically undercapitalized. (In the chart below, the yellow bars denote assets, green denotes liabilities and purple denotes capital.)
The troubled asset ratio at First International Bank swelled to 260%, far above the national median for all banks. A troubled asset ratio of over 100% almost always results in banking failure.
At the time of closing First International Bank had total assets of $239.9 million and total deposits of $208.8 million. In addition to assuming all deposits of First International, American First National Bank will also purchase all of the assets the failed bank. This is the first purchase of a failed bank by American First National Bank.
According to its website, American First National Bank aspires to become the leading Asian-American owned bank in the United States. The Bank opened for business in 1998, is profitable and currently has total assets of $698 million. American First National Bank has 5 offices in Houston and 4 in Dallas
The loss to the FDIC Deposit Insurance Fund for the failure of First International is $53.8 million. The failure of First International is the first banking failure in Texas this year and the 74th banking failure of 2011.