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Frontier Bank Seized and Sold May 1, 2010

Posted by Sean Tufts in Articles, Research/Data.
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News last night does comes not as a huge surprise based on building rumors since Frontier’s failure to meet the recapitalization deadline two weeks ago, but this is still an enormous deal of commercial real estate borrowers in the Northwest.   Frontier has been attempting to sell off non-performing loans and REO assets for the last couple of months and has had little flexibility to sell at current market values for fear of further hurting their capital ratios.

Our belief is that Union Bank will have a new motivation to clean up their bad assets with the loss-sharing agreement and allow their notes and assets to be sold at market value.  Although this comes as an eventual cost to the FDIC (and tax payers) we believe it will create some fresh activity and numerous opportunities in the market.

Friday, April 30, 2010, 6:03pm PDT  |  Modified: Friday, April 30, 2010, 6:42pm

Frontier Bank closed, sold to California bank

Puget Sound Business Journal (Seattle) – by Kirsten Grind

“Government regulators shut down Frontier Bank, of Everett, Friday evening and sold its assets to San Francisco-based Union Bank, National Association, ending the more than 30-year run of the state’s second-largest commercial bank.

Frontier Bank, which had suffered through a string of problems in recent weeks, was deemed undercapitalized by government regulators.

Like many community banks across Washington, it suffered as a result of its extensive commercial real estate loans to developers across the state. In its most recent earnings report, the bank held $878.4 million in nonperforming assets, one measure of bad loans.”

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