The First Trump FDIC Friday Bank Failure is Proficio Bank of Utah

by John Galt
March 3, 2017 20:45 ET

Tonight marks the official beginning of the President Trump era of the FDIC seizing failed banks as the bank seized on January 27th was actually initiated under Obama’s leftovers running the U.S. Treasury, not Steve Mnuchin or anyone from Trump’s team. What is interesting about this failure is that is sounds eerily like those small banks which started failing in 2006 and 2007 which preceded the avalanche of failed institutions in the mortgage and bank implosion. From the former parent company’s website, NHB Holdings:

Proficio Bank, a Utah state-charted commercial bank, is located in Cottonwood Heights, Utah and regulated by the Utah Department of Financial Institutions and the FDIC. Proficio Bank began operations in early 2007. Proficio Bank is the wholly-owned subsidiary of NHB Holdings and the parent company of Proficio Mortgage Ventures, LLC (“PMV”), a Delaware limited liability company that is headquartered in Orlando, Florida. Proficio Bank has two core business lines: commercial lending conducted through the Bank and mortgage lending conducted through PMV. Proficio Bank is a business bank and specialty lender. Proficio Bank has a niche strategy of serving the financial needs of the corporate relocation industry and “in-market lending” to small‑ and middle-market borrowers in the Salt Lake City metropolitan areas.

Fascinating. Note the areas in the statement above which were highlighted in red and think about the small mortgage and other lenders which failed in late 2006 and early 2007. This could be the start of something larger later down the road or just a subtle hint as to the amount of exposure the smaller banks have taken in the commercial real estate markets which used to be considered “hot” like Utah, Florida, etc.

In the mean time, here is the information from the FDIC website about this bank failure:

Cache Valley Bank, Logan, Utah, Assumes All of the Deposits of Proficio Bank, Cottonwood Heights, Utah
FOR IMMEDIATE RELEASE
March 3, 2017

Proficio Bank, Cottonwood Heights, Utah, was closed today by the Utah Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Cache Valley Bank, Logan, Utah, to assume all of the deposits of Proficio Bank.

The sole branch of Proficio Bank will reopen as a branch of Cache Valley Bank during its normal business hours. Depositors of Proficio Bank will automatically become depositors of Cache Valley Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage up to applicable limits. Customers of Proficio Bank should continue to use their existing branch until they receive notice from Cache Valley Bank that it has completed systems changes to allow other Cache Valley Bank branches to process their accounts, as well.

This evening and over the weekend, depositors of Proficio Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of December 31, 2016, Proficio Bank had approximately $68.2 million in total assets and $65.0 million in total deposits. In addition to assuming all of the deposits of the failed bank, Cache Valley Bank agreed to purchase $60.1 million of the failed bank’s assets. The FDIC will retain the remaining assets for later disposition.

Customers with questions about the transaction should call the FDIC toll-free at 1-800-930-5170. The phone number will be operational this evening until 9 p.m., Mountain Time (MT); on Saturday from 9 a.m. to 6 p.m., MT; on Sunday from noon to 6 p.m., MT; on Monday from 8 a.m. to 8 p.m., MT; and thereafter from 9 a.m. to 5 p.m., MT. Interested parties also can visit the FDIC’s website at https://www.fdic.gov/bank/individual/failed/proficio.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $11.0 million. Compared to other alternatives, Cache Valley Bank’s acquisition was the least costly resolution for the FDIC’s DIF. Proficio Bank is the third FDIC-insured institution to fail in the nation this year, and the first in Utah. The last FDIC-insured institution closed in the state was SunFirst Bank, Saint George, on November 4, 2011.

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