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Regulators Seize Five Banks Friday

WASHINGTON (TheStreet) -- State and federal regulators closed four banks and one small thrift Friday, bringing the total number of U.S. banking failures this year to 120.

The failed institutions included United Commercial Bank of San Francisco, the main subsidiary of UCBH Holdings (UCBH). The bank had $11.2 billion in total assets and was the seventh largest failure during the 2008-2009 crisis.

All five institutions were included in TheStreet.com's list of undercapitalized banks and thrifts. Of the 116 banks and thrifts that were undercapitalized at the end of the second quarter, 30 have already failed.

United Commercial Bank

Among Friday's failed banks, the largest by far was United Commercial Bank. The bank had a strong focus on serving Chinese-American customers in the U.S. and had rapidly built a large commercial real estate and construction portfolio in recent years. United Commercial was also expanding its business in China.

The bank had agreed to a Federal Deposit Insurance Corp. cease-and-desist order on Sep. 3. Among the requirements of the order were hiring qualified management, improving board of directors oversight and raising a significant amount of capital.

With a second-quarter net loss of $263 million and nonperforming assets (including nonaccruing loans and repossessed real estate) making up 6.82% of total assets -- even after the bank charged off $558 million in loans during the first half of the year -- United Commercial was undercapitalized as of June 30, with a total risk-based capital ratio of 7.92%. This ratio needs to be at least 10% for most banks to be considered well-capitalized under regulatory guidelines.

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