SAN FRANCISCO (MarketWatch) -- A California-based bank that focused on the Chinese-American market was the largest of five failures on Friday that cost U.S. taxpayers more than $1.5 billion.
United Commercial Bank of San Francisco, whose parent company was UCBH Holdings Inc. (UCBH 0.84, -0.02, -2.33%) , was shut down by federal banking regulators late Friday, along with four other banks. The shutdown of the five banks brings the number of bank failures for 2009 to 120.
The 63 U.S. branches of United Commercial were set to reopen Saturday under the ownership of Pasadena, Calif.-based East West Bancorp Inc. (EWBC 8.65, +0.27, +3.22%) . United Commercial, which specialized in serving the Chinese community throughout the U.S. and American companies doing business in China, had assets of $11.2 billion and deposits of $7.5 billion as of Oct. 23.
The seizure of the bank by regulators comes after it had already received $299 million in federal financial aid last year. Its closure will cost the insurance deposit fund $1.4 billion, said the Federal Deposit Insurance Corp.
The company had a banking license in China, a branch in Hong Kong and a subsidiary in Shanghai, and those will be assumed by East West Bancorp. The Hong Kong Monetary Authority said deposits at UCB Hong Kong will be fully covered, according a report on Saturday by the Xinhua news agency.
East West said in a statement that the United Commercial transaction will create the largest bank in the U.S. focusing on the Asian American community, and the second-largest independent bank based in California. East West operates 137 branches throughout the U.S. and China.
"This is a transformational event for both institutions and represents an exciting growth opportunity for East West," East West Chairman and Chief Executive Dominic Ng said in a statement.
The closures of United Security Bank of Sparta, Ga.; Home Federal Savings Bank of Detroit; Gateway Bank of St. Louis and Prosperan Bank of Oakdale, Minn., will cost the deposit insurance fund an estimated $132.7 million.
- United Security Bank had total assets of $157 million and total deposits of $150 million as of Sept. 14, according to the FDIC. Ameris Bank of Moultrie, Ga. agreed to assume United Security's deposits, and will pay the FDIC a premium of 0.36% of all the deposits.
- Home Federal Savings Bank as of Sept. 24 had total assets of $14.9 million and total deposits of $12.8 million. Liberty Bank and Trust Co. of New Orleans did not pay a premium to assume the deposits.
- Gateway Bank had total assets of $27.7 million and total deposits of $27.9 million as of Sept. 25. Central Bank of Kansas City didn't pay a premium for Gateway's deposits.
- Prosperan Bank had total assets of $199.5 million and total deposits of $175.6 million. Grand Forks, N.D.-based Alerus Financial will pay the FDIC a premium of 1.02% to assume all Prosperan's deposits and agreed to purchase $173.9 million of the failed bank's assets.
