The First Heritage Bank in Newport Beach was reopened on Monday as part of the Mutual of Omaha Bank, after the former was seized by the Federal Deposit Insurance Corp. last week for being undercapitalized.

The federal regulators declared First Heritage and First National Bank of Nevada, both owned by Arizona-based First National Bank Holding Co. insolvent. The deposits of both the banks had been bought by Mutual of Omaha  Bank and all the branches would also be operated by it.

“We would first like to reassure all customers of First National Bank of Nevada and First Heritage Bank that all their deposits are safe and accessible,” said Jeff Schmid, chairman and CEO of Mutual of Omaha Bank.

First Heritage Bank with the assets of only $254 million and deposits of $233 million, specializes in commercial banking and its strategy was to collect deposits from businesses and lend for real estate developments. It has its three operated branches in Newport Beach, Los Angeles and Ontario. It had a first-quarter net loss of $1.9 million, according to a regulatory filing.

With similar strategy First National Bank of Nevada operated twenty-five branches in Arizona, Nevada and Southern California. It held assets of  $3.4 billion and deposits of $3 billion. The failure of both the banks has been attributed to bad loans to developers and home builders in Arizona and Nevada.

Total twenty- eight branches of the First National Bank of Nevada and First Heritage Bank were closed on Friday by the FDIC. Mutual of Omaha Bank bought all of the two banks’ deposits. According to a release, accounts with balances over the FDIC insured amount of $100,000 were also transferred to Mutual of Omaha Bank.
 
Earlier this month, Pasadena-based IndyMac Bancorp Inc. had failed because of the subprime mortgage crisis, as federal regulators shut down the savings bank in one of the largest U.S. bank failures ever.

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