First National Bank branches are closed by FDIC in Tucson

 

 

 

 

The banking industry woes hit Arizona on Friday night as the federal Office of the Comptroller of the Currency closed the Scottsdale-based First National Bank of Arizona.

 

However the banking officials said depositors' money is safe. They have also negotiated along with the feds, an agreement for the Mutual of Omaha Bank to take over their deposits.

 

There were two branches in Tucson located at 6298 E. Grant Road and 10195 N. Oracle Road.

 

Just to make it clear neither of the banks are affiliated in anyway to National Bank of Arizona or Bank of Arizona.

 

The bank has 15 branches that will reopen as Mutual of Omaha according to the Federal Deposit Insurance Corp., which was named receiver. As with other closures, the  deposits up to $100,000 remain federally insured.

 

Customers will be allowed to gain access to their money by writing checks, they will be able to use the automatic teller machines or debit cards according to the agency.

All checks drawn on the bank will be processed as per normal procedure and customers should continue to make loan payments as usual, the FDIC said.

 

The federal takeover applies also to the First National Bank of Nevada, the parent company of the Arizona bank. The two institutions merged on June 30.

 

As Arizona's real estate economy slowed, the bank had suffered a large loss in the first quarter of this year of  $131.4 million.

A statement by  the comptroller's office said it had acted after finding the bank "was undercapitalized and had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices."

Apparently Mutual of Omaha Bank's acquisition of the deposits was the least costly way to resolve the issue for the taxpayer-supported Deposit Insurance Fund. The expected losses to uninsured depositors are being fully covered by a premium paid for the banks' franchises, the FDIC said.

Hopefully nobody will lose any money because of this closure. The next question is will there be loss of jobs for those that are already employed there?

The current branches are to remain open with new banking partner Mutual of Omaha.

 

First National Bank of Arizona was the first bank with operations in Arizona to fail in recent years.

 

There are seven FDIC-insured banks  that have closed this year across the US  as the real estate market and the subprime crisis has gripped the financial industry.