Two more banks fail, Mutual of Omaha acquires deposits

Just two weeks ago IndyMac became the second largest bank failure in our country's history. Ever since that time, the speculation has become more and more rampant by the day as to which bank may be the next to fail. We all knew it was coming, but we had to speculate on which would be the next to follow in the footsteps of IndyMac. Well now we can stop the speculation as to who would be next. Last night federal regulators stepped in and tookover two different First National Bank Units: First National Bank of Nevada and First Heritage Bank.

The two banks have a total of 28 offices in Nevada, California, and Arizona. The two failed banks had a total of $3.6 billion in combined assets.

After the FDIC gained control over the two banks, it didn't take long before Mutual of Omaha stepped to the plate and agreed to acquire all the deposits of the failed First National units. Mutual of Omaha will be acquiring all deposits, both insured and uninsured. All of the former First Heritage and First National Bank branches will reopen on Monday morning as branches of Mutual of Omaha Bank. Jeff Schmid, the CEO and Chairman of Mutual of Omaha, reassured depositors of the two failed banks that there money is in good hands and that everything is completely safe and accessible.

What should customers of the two failed banks do in the meantime? This weekend the money from your accounts can be accessed as normal by writing checks, using debit cards, or using the ATM. As of Monday morning you can go to your local banking office which will now be Mutual Bank of Omaha and transfer money as necessary as you normally would.

The FDIC will retain most of First National Bank's loan portfolio. Those who have a loan with these failed banks need to continue making their payments as usual. Continue to make checks out to the former bank until further notice is given as to where the payments should be sent in the future.

Why were these banks taken over by federal regulators in the first place? The federal regulators deemed these units to be very under capitalized and they had both experienced a substantial disippation of assets because of unsafe practices. Clearly both of these banks had taken a plunge into the once booming mortgage area, and they have taken the fall for it.

The best lesson to be learned from this is: it is always a good idea to be prudent with your investments, because what goes up, can come down even faster. Hopefully other banks across the country are paying attention to this important lession!