Banking regulators shut down Puerto Rico-based Doral Bank late last week, selling more than half of its $5.9 billion in assets to Banco Popular de Puerto Rico.
The takeover marked the biggest failure of a U.S. bank since 2010.
Doral Bank, which had a total of $4.1 billion in deposits, has long struggled with under-capitalization and non-performing loans. It was also involved in a public spat with the Puerto Rican government over a $230 million tax credit.
The bank, which maintained an executive office at 600 Brickell Avenue in Miami, had 26 branches in Puerto Rico, New York City and the Florida Panhandle. Banco Popular and its affiliates will operate eleven of those branches, and Arkansas-based Conway Bank will take over the Florida locations.
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FirstBank Puerto Rico, which has regional headquarters in Miami, purchased the remaining ten branches, all on the island. In the process, it acquired approximately $600 million in deposits and a mortgage loan portfolio of $300 million.
FirstBank also operates 10 branches in South Florida, with plans to open a new location in Brickell later this year.
“This acquisition strengthens our corporate balance sheet and as the bank continues to strengthen, clearly Florida is our growth market and it allows us to dedicate more resources to growing the Florida franchise,” said Calixto Garcia-Velez, executive vice president and regional executive for FirstBank Florida.
The decision to shutter Doral Bank was taken by the Office of the Commissioner of Financial Institutions of Puerto Rico.
The Federal Deposit Insurance Corporation will continue to insure deposits of up to $250,000, according to an announcement posted on Doral Bank’s website. Customers can continue to use Doral Bank ATMs and locations as before.
The FDIC said it will lose about $748.9 million as a result of the bank’s failure, the most since Westernbank Puerto Rico and R-G Premier Bank of Puerto Rico collapsed on the same day in April of 2010. The two failures cost the FDIC $3.8 billion ad $1.4 billion respectively.