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Bank Failure Caused by Fraud: Regulator

WASHINGTON ( TheStreet) -- La Coste National Bank in Texas failed Friday due to "fraudulent activity," an Office of the Comptroller of the Currency official told TheStreet.

La Coste National Bank, with only $54 million in total assets, appeared to be in fairly strong shape, according to its Dec. 31 regulatory financial reports, which made its seizure Friday unusual. The bank was well-capitalized per regulatory guidelines and had remained profitable through 2009 with minimal loan losses and strong year-end asset quality.

While the OCC was unable to provide any additional information, a spokesman for the Federal Bureau of Investigation's San Antonio field office told TheStreet that bureau and the Federal Deposit Insurance Corp.'s Office of the Inspector General are investigating the matter.

La Coste National Bank was one of four bank failures on Friday, along with Marco Community Bank of Marco Island, Fla., La Jolla Bank of La Jolla, Calif. and George Washington Savings Bank of Orland Park, Ill., which was acquired by FirstMerit Corp. (FMER).

A total of 20 banks and thrifts have failed so far this year. All 185 bank failures since the beginning of 2008 are detailed on TheStreet.com's interactive bank failure map:

chart

Georgia leads all states with 32 bank or thrift failures from 2008 through Friday, followed by Illinois and California with 24 failures each, and Florida with 19 failures.

See TheStreet's recent coverage of undercapitalized banks for more information on troubled institutions in these states.

-- Written by Philip van Doorn in Jupiter Fla.

Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.

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