Bank of Choice, Greeley, CO, Closed By Regulators

Bank of Choice, Greeley, Colorado, was closed today by state regulators.  The FDIC, appointed as receiver, sold the failed bank to Bank Midwest, N.A., Kansas City, MO.

Bank of Choice had 17 branches with $1.07 billion in assets and $924.9 million in deposits.  Depositors of the failed bank will automatically become depositors of Bank Midwest when the failed Bank reopens on Saturday.  Over the weekend, depositors of Bank of Choice can access their money via checks, debit cards and ATMs.

Established in 2004, Bank of Choice grew rapidly as real estate values in Colorado increased during the bubble years.  The Bank expanded the number of branch locations and expanded its asset base by acquiring smaller banks in 2005 and 2006.  As the real estate bubble collapsed, Bank of Choice experienced a large number of loan defaults.

In November 2010, the Bank entered into a consent decree with the Federal Reserve which, among other orders, required the Bank to raise additional capital.  At March 31, 2011, Bank of Choice had $106 million in non-accruing loans and and $42 million of REO.  The Bank’s capital ratios fell far below regulatory minimum requirements and regulators were forced to close the Bank.

Bank Midwest, the acquiring bank, was until recently owned by holding company Dickinson Financial Corporation.  In early July, Dickinson Financial agreed to sell Bank Midwest to NBH Holdings in order to raise capital to shore up its financial position.

Dickinson Financial has assets of over $5.9 billion and is the holding company for a number of banks including Academy Bank, Armed Forces Bank of California, Southern Commerce Bank and SunBank.  Dickinson Financial Corp received $146 million from the US Treasury under the TARP Capital Purchase Program in January 2009 and is in arrears on the payments.  Dickinson made one dividend payment in May 2009 and has not made a payment since that time.

Bank Midwest will purchase all of the assets of failed Bank of Choice.  As additional compensation to the FDIC, Bank Midwest gave the FDIC a value appreciation instrument which will allow the FDIC to participate in any profits realized by Bank Midwest on the acquisition of Bank of Choice.

The loss to the FDIC Deposit Insurance Fund for the failure of Bank of Choice is estimated at $213.6 million.  Bank of Choice is the nation’s 58th banking failure and the 5th in Colorado.