America West Bank, based in Layton, was seized Friday by the state for failing to raise enough money to stay in business.
Utah Department of Financial Institutions (UDFI) commissioner G. Edward Leary made the announcement in a press release Friday night. He said he immediately appointed the FDIC to take over the failed bank, which then sold it to Cache Valley Bank in Logan.
"America West Bank was insolvent and not in a safe and sound condition to transact business," the press release stated.
Depositors of America West Bank will still be able to access their money by check, ATM or debit cards over the weekend. The bank's three branches in Layton, Ogden and Murray will reopen Monday as branches of Cache Valley Bank. Deposits will continue to be insured by the FDIC.
UDFI had been monitoring America West Bank for about 90 days and had ordered it to raise capital to an acceptable level. UDFI chief examiner Michael Jones said recent economic conditions ultimately brought down the bank, which was founded in 2000.
According to Bankrate.com, America West Bank made $8 million in 2007 and $5.2 million in 2006. In 2008 it lost $11 million.
In January 2008, the FDIC filed a cease and desist order against America West Bank for, among other things, using policies and practices that were detrimental to the bank and jeopardized the safety of its deposits. The bank's board of directors also failed to adequately supervise management, the FDIC stated. The bank operated with inadequate capital, an inadequate loan valuation reserve, a large volume of poor quality loans, unsatisfactory lending practices and was in violation of several laws or regulations, the cease and desist order states.
As of Dec. 31, 2008, America West Bank had total assets of about $299.4 million and total deposits of $284.1 million. To cover deposits, personnel expenses and salaries due to the bank closure, Jones said the FDIC estimates about $119.4 million will be drawn from the Deposit Insurance Fund.
America West Bank is the second bank to fail in Utah this year. MagnetBank, based in Salt Lake City, failed in January.
Attempts to reach America West Bank CEO Doug Durbano for comment were unsuccessful.
To help determine if a bank is financially strong, the Federal Deposit Insurance Corp. on its Web site points consumers to several bank ratings companies, among them BauerFinancial, Bankrate.com and The Street.com's Weiss ratings service. They rank the individual institutions using data from the quarterly financial reports that banks must file with federal regulators.
In September 2008, the Tribune collated data for 70 Utah banks ranked by those three ratings agencies. At that time, there were only a handful judged to be struggling. Out of the 70, America West Bank was ranked with the worst, at 67. BauerFinancial and Bankrate.com independently gave America West only two stars on their scales; the bank received a D- from the Street.com's Weiss ratings service. In December 2008, Bankrate.com dropped its evaluation of America West to its lowest rating, one star.
