First Heritage Bank, NA - Newport Beach, CA Bank Gagal - Episode 347

Freesia Brindski (0:01)

Good morning, good morning. Thank you so much for joining me. This is the podcast, The Endurance of Labor Laws. I'm your lovely host, Freesia Brindisi. Today is episode 347, and we're gonna take a look at another filled bank. So let's go ahead and get started on this puppy. Today we're gonna take a look at First Heritage Bank NA, and NA stands for National Association. This bank was located in Newport Beach, California. The acquiring financial institution was Mutual of Omaha Bank. And First Heritage Bank NA, National Association, that one failed July 25th in 2008 In terms of the history behind this one, it's slightly interesting, and we'll see this kind of take place in their press release. But in terms of the introduction and a little bit of background information, it says on July 25th, 2008, First Heritage Bank NA, National Association of Newport Beach, California, was closed by the Office of the Comptroller of the Currency, also known as OCC. Subsequently, the Federal Deposit Insurance Corporation, FDIC, was named receiver. As receiver, the FDIC is charged with winding up the business affairs of the failed financial institution. This includes the disposition of assets and liabilities of the failed financial institution and payment of dividends to approved creditors in order of priority. So again, if you're not an approved creditor, you're not getting paid. And also, if you're not at the, I say the upper part of the list of order of priority, you're probably not going to get paid or you might just get paid a fraction. That's just kind of how that is with this. Because whenever a bank fails, that means that money is usually missing or mismanaged. It's not always fraud and embezzlement, but most of it borders on it, or it's borderlines it, so to speak. That's why I am in favor of having some of these bank executives do federal prison time, because again, many of these banking managers, these higher ups, they tend to just jump from one place of business to another, meaning they tank one bank, no one calls them out on it, and they just go to another bank. I'm not saying it's always their fault, but if you're manning the ship, you are responsible for it, because you're dealing with other people's money, and that's leadership, that's just kind of how it is. If you do not want to be held as responsible, then don't be a leader. You know, or just don't be an adult, I guess. But even kids have to be held accountable, and that's how they're taught discipline and leadership roles, and they're taught responsibility, and also taught integrity. So just FI, be aware of that. Goes on to say, the FDIC as receiver has taken all necessary actions to conclude the affairs of the failed financial institution, made all dividend distributions as required by law, and the receivership is deemed terminated. In terms of the press release, it says the FDIC has issued a press release, I'll read that in just a moment, about the institution's closure. If you represent a media outlet and would like information about the closure, please contact David Barr at 202-898-6992, or Andrew Gray at 202-898-7192, or 202-494-1049.

I was able to get a copy of this press release. Again, whatever something is being released in terms of a bank closure or bank failure and something is being released via the FDIC, it is almost always 99.9% of the time for immediate release. That's just how it is. Again, this is directly from the FDIC. It was released on July 25, 2008 Again, the media contact in Washington is Andrew Gray at 202-898-7192.

His email address is angray.fdic.gov.

In Arizona, I guess this David Barr guy, he moves around because he's had locations in Washington DC, California and now Arizona. So he probably has three or four houses if I had to guess. Let's see how much he makes a year. But in Arizona, David Barr, it lists his cell as 703-622-4790.

Email address is dbarr, d-b-a-r-r, at fdic.gov. In terms of what was released for the press, it says Mutual of Omaha Bank acquires all deposits of First National Bank of Nevada and First Heritage Bank and A National Association. So this press release, release, excuse me, is kind of a two for one special in terms of this because it's including another bank, First National Bank of Nevada. And then the one that we are discussing today is First Heritage Bank and A National Association. It says all insured and uninsured deposits transfer to acquiring bank. First National Bank of Nevada, of Reno, Nevada, and First Heritage Bank and A National Association of Newport Beach, California owned by First National Bank holding company of Scottsdale, Arizona were closed today by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, FDIC was named receiver. The FDIC entered into purchase and assumption agreements with Mutual of Omaha Bank of Omaha, Nebraska to take over all of the deposits and certain assets of the First National Bank of Nevada, Reno, let's see here of Reno, Nevada. Sorry, this wording is terrible. It says also operating as First National Bank of Arizona, which recently merged into it. So that's why there's a couple of different banks listed here. There were mergers and that's not always a good thing because it means you're taking more financial risk and what's interesting is that there is a merger but they still failed. So just because there's a merger, that doesn't mean it's smart or wise or that's a good thing. Sometimes they're just covering up financial losses and this one they could not cover up because it's a financial banking institution. So you can't cover up failure when you're dealing with other people's money. That's just how it is. Goes on to say, another thing that they acquired through this is First Heritage Bank, National Association of Newport Beach, California, which is the specific one we're talking about today. It says the 28 offices of the two banks, two failed banks, will reopen on Monday as branches of Mutual of Omaha Bank. All depositors, including those with deposits and excess of the FDIC's insurance limits, will automatically become depositors of Mutual of Omaha Bank for the full amount of their deposits. That says a lot. That's a lot of financial risk. It's not just a portion, it's all of it. That's very shady because we don't see that very often. I could guess or be pleasantly surprised that they're doing this out of the goodness of their hearts, but I suspect there's something else behind this because we haven't really seen a bank take over all of it and basically say, hey, we're going to basically take over the full amount of your deposits, even the ones that are not insured. It's basically what that's saying. Depositors will continue to be insured with Mutual of Omaha Bank, so there is no need for customers to change their banking relationship to retain their deposit insurance. Over the weekend, customers of the banks can access their money by writing checks or using ATM or debit cards. Basically, the same thing. I don't know why they specify that. Checks drawn on the banks will be processed normally. Loan customers should continue to make loan payments as usual. So even though these two or three banks completely failed, all combined in one, you still have to make your payments. So I understand why, but it really says a lot that a bank can completely fail, and if they are bought out, you're still on the hook, even though they used and abused your money. That really says a lot. It says, of the 10 institutions that have failed over the last two years or past two years, this is back in the day, 2008, this is the second time in which another bank acquired all of the failing banks insured and uninsured deposits. Mutual of Omaha Bank's acquisition of all deposits was the least costly resolution for the deposit insurance fund compared to all alternatives because the expected losses to uninsured depositors were fully covered by the premium paid for the bank's franchises. So this is interesting that says the bank's franchises. I was not aware that these were considered franchises. So I'll have to look up why that is. Because whenever I think of franchises, I think of like Annie Anne's or not necessarily Starbucks. I don't know if Starbucks are franchises. Usually they're their corporate stores, but I could be wrong on that. But you can buy a franchise like Jersey Mike's and things like that. I'm not aware that banks, if that's the right word to describe it, because banks are not something that you can just pop up overnight and just because you have money, that doesn't mean that you can just buy into a bank and pop up a so-called franchise. It's not the same because you're not providing, it's not the same type of goods or services. It's not like you're making a sandwich and the person walks out the door. You're dealing with a lot of money and you're dealing with the banking system and the financial sector and you're also dealing with the currency of the nation and possibly of other countries depending on, if you have internationals doing business at your bank. So I'm not aware that banks have franchises in the traditional sense. Like for example, there are franchises of McDonald's. Not every McDonald's is a franchise. Some are corporately owned, meaning they're owned directly by the company. In case you don't know what a franchise is, I'll give an example. So let's say for example, I want to own a Annie Anne's or a Jersey Mike's. I'll go with Jersey Mike's because I like their sandwiches most of the time.