On Friday, the California Department of Financial Institutions closed Butte Community Bank, headquartered in Chico, California, and Pacific State Bank, headquartered in Stockton, California, and appointed the FDIC as receiver for the two banks. As receiver, the FDIC entered into a purchase and assumption agreement with Rabobank of El Centro, California, to assume all of the deposits and to purchase essentially all the assets of the two failed banks.
As of June 30, 2010, Butte Community Bank had total assets of $498.8 million and total deposits of $471.3 million and Pacific State Bank had total assets of $312.1 million and total deposits of $278.8 million. Rabobank will pay a premium of 4.05% for the deposits of the Butte Community Bank but it did not pay the FDIC a premium for the deposits of Pacific State Bank. The FDIC and Rabobank entered into a loss-share agreement on $425.4 million of Butte Community Bank's assets and $249.7 million of Pacific State Bank's assets.
The FDIC estimates that the cost to the Deposit Insurance Fund will be $17.4 million for Butte Community Bank and $32.6 million for Pacific State Bank. Butte Community Bank and Pacific State Bank are the 115th and 116th FDIC-insured institution to fail in the nation this year, and the 7th and 8th in California.