Wed September 9, 2009
First State Bank of Flagstaff closes
Flagstaff, AZ – First State Bank of Flagstaff re-opened yesterday as Sunwest Bank, after First State was closed Friday by the F-D-I-C. California-based Sunwest assumed First State's 95 million dollars in deposits and all of its loans.
Glenn Gray, President of Sunwest Bank says First State made a combination of bad decisions that led to its closure.
[They got involved in some loans that were lead by other financial institutions outside their market. Those loans did not turn out so well. They were large syndicated real estate related transactions and that caused a lot of stress in their portfolio. And the other thing that caused them problems was concentration in speculative construction and land acquisition and development loans.]
First State Bank had $105 million in assets. The FDIC expects to lose $47 million on the transaction, almost half the value of First State Bank's loan portfolio.
Gray says the bank's name will stay the same for the time being and all six branches in Flagstaff, Cottonwood and Payson will continue to operate as usual.
First State is the 89th bank in the nation to fail this year and the third in Arizona.