Los Angeles-based Mirae Bank has been closed by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. However, in order to protect the depositors, FDIC has entered into a purchase and assumption agreement with Wilshire State Bank, Los Angeles, California, to assume all of the deposits of Mirae Bank.
Following this agreement, depositors of Mirae Bank will automatically become depositors of Wilshire State Bank. The five offices of Mirae Bank will reopen as branches of Wilshire State 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. Customers of both banks can continue to use their existing branches until Wilshire State Bank can fully integrate the deposit records of Mirae Bank.
The FDIC and Wilshire State Bank entered into a loss-share transaction on approximately $341 million of Mirae’s assets. Wilshire State Bank will share in the losses on the asset pools covered under the loss-share agreement. It has reported that the loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.
In addition to assuming all of the deposits of the failed bank, Wilshire State Bank agreed to purchase approximately $449 million of assets. The FDIC will retain the remaining assets for later disposition. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $50 million.
