FDIC Shuts Down Puerto Rico's Doral Bank

(RTTNews) - The Federal Deposit Insurance Corp. or FDIC, announced Friday the shuttering of Puerto Rico's Doral Bank, taking the count of total U.S. bank closures in 2015 to four, after 18 in 2014, 24 in 2013, 51 in 2012, 92 in 2011 and the 157 bank closures in 2010.

It is the most costly failure since Western Bank, which was also based in Puerto Rico and collapsed in 2010 at a cost of $3.8 billion. Banco Popular will operate eight of Doral Bank's 26 former branches. FDIC entered into separate agreements with three banks to acquire 18 of the remaining locations. Banco Popular North America will operate Doral's three branches in New York City and Centennial Bank will take over its five branches in Florida.

As of December 31, Doral Bank had approximately $5.9 billion in total assets and $4.1 billion in total deposits. As part of the transaction with the FDIC, Banco Popular will purchase $3.25 billion of Doral Bank's assets. Banco Popular agreed to pay the FDIC a premium of 1.59 percent for the right to assume Doral Bank's deposits.

The FDIC entered into two separate agreements to sell $1.3 billion of Doral Bank's assets to other parties. Those sales are expected to close in 30 days and the FDIC will retain the remaining assets for later disposition.

"Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits," the FDIC said.

Doral has also struggling in a lengthy fight with the Puerto Rico's government over a $229 million tax refund. It lost an appeals court ruling this week to grant the lender the refund.

FDIC accidentally released the press release early and sending Doral's shares down 46 percent before trading was halted.