July 23, 2010 – Home Valley Bank – Banking Failure #103
See analysis of this week’s bank closings at – Banking Failures Hit 103 As Regulators Close Seven More Banks
FDIC – Home Valley Bank, Cave Junction, Oregon, was closed today by the Oregon Department of Consumer and Business Services, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with South Valley Bank & Trust, Klamath Falls, Oregon, to assume all of the deposits of Home Valley Bank.
The five branches of Home Valley Bank will reopen on Monday as branches of South Valley Bank & Trust. Depositors of Home Valley Bank will automatically become depositors of South Valley Bank & Trust. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage.
As of March 31, 2010, Home Valley Bank had approximately $251.80 million in total assets and $229.6 million in total deposits. South Valley Bank & Trust will pay the FDIC a premium of 1.05 percent to assume all of the deposits of Home Valley Bank. In addition to assuming all of the deposits of the failed bank, South Valley Bank & Trust agreed to purchase essentially all of the assets.
The FDIC and South Valley Bank & Trust entered into a loss-share transaction on $211.6 million of Home Valley Bank’s assets. South Valley Bank & Trust will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $37.1 million. Compared to other alternatives, South Valley Bank & Trust’s acquisition was the least costly resolution for the FDIC’s DIF. Home Valley Bank is the 103rd FDIC-insured institution to fail in the nation this year, and the second in Oregon. The last FDIC-insured institution closed in the state was Columbia River Bank, The Dalles, on January 22, 2010.