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2 Banks Close, But Deposits Are Protected

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The Associated Press

Published: July 27, 2008

PHOENIX - Customers of two banks closed by federal regulators were assured that every penny of their money was protected, preventing lines of angry accountholders from forming Saturday.

The calm response was a stark contrast to the hundreds of angry customers who waited for hours earlier this month in Southern California to demand their money after IndyMac Bank's assets were seized.

The 28 branches of the 1st National Bank of Nevada and First Heritage Bank N.A. - owned by Scottsdale, Ariz.-based First National Bank Holding Co. - were closed Friday by the Federal Deposit Insurance Corp.

But Mutual of Omaha Bank bought all of the two banks' deposits, even those over the amount protected by FDIC insurance limits. IndyMac customers had to take a loss on whatever they had in the bank over the insurance limits.

On Monday, Mutual of Omaha will open the banks as its own branches.
Mutual of Omaha Bank is a subsidiary of Mutual of Omaha, a 99-year-old insurance and financial services company with more than $19 billion in total assets.

The Office of the Comptroller of the Currency said in a news release that 1st National was undercapitalized and had experienced substantial dissipation of assets and earnings "due to unsafe and unsound practices."

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