As of Friday, Statewide Bank is no more.

Instead, through the financial institution conservatorship and receivership process, Home Bank of Lafayette has taken over the former Statewide.

What does this mean to depositors of Statewide? According to reports, the bank will operate as usual and depositors have full access to their accounts via ATMs, check and debit transactions at the former Statewide locations. In a press release, Home Bank stated that working together with the Federal Deposit Insurance Corp., FDIC, they have purchased “all of Statewide’s deposits and has entered into a loss share agreement covering Statewide’s loans and real estate.”

According to Home Bank, they will expand the market area through Statewide Bank’s six banking offices which are located in Covington, Madisonville, Mandeville, Abita Springs, Slidell and Folsom.

In a release to press on Monday, John W. Bordelon, President and Chief Executive Officer of Home Bank said, “We welcome Statewide Bank’s customers to the Home Bank family. Those customers now bank with one of the strongest community banks in the country. We expect our new customers will be very pleased with the level of service and array of products we provide. We also welcome the employees of Statewide Bank.  Given the difficulties faced by Statewide over the past year, their commitment and dedication to serving customers is admirable.”

Sidney Seymour, chief examiner for the Office of Financial Institutions, explained the process. Financial institutions are constantly monitored through annual reviews, periodic visits and regulatory and supervisory oversights. In the normal process, key areas are reviewed and the institutions are given a rating. If during the course of time the rating changes, for example from a 1 to a 2, monitoring is increased.

In the case of Statewide, it was routinely monitored over a long period of time. Finally, Seymour said, poor earnings and insufficient capital with an inability to recapitalize caused Statewide to be placed in a conservatorship by the Commissioner of Financial Institutions on Friday and was confirmed as conservator by the 22nd Judicial District Court. FDIC was named, as receiver of the bank effective at 5 p.m. Friday and through an agreement with the FDIC, Home Bank of Lafayette will acquire the bank.

Seymour said that Statewide’s bond portfolio was backed by mortgage-based securities. When the mortgage market collapsed, their securities collapsed also.

Seymour said, “There are no bad loans, but there are loans that go bad.”

Seymour said it’s a great opportunity for Home Bank to enter St. Tammany Parish, a very strong market with low unemployment. He also stated that nationwide, Louisiana banks are very sound, with Statewide being the first bank since 2002 to enter receivership in Louisiana.

In contrast, it is the 40th bank in the nation this year to go through the process. Seymour said last year 140 banks were closed nationwide. “Louisiana is still in great shape compared to the rest of the country,” he said.

According to commercial banking statistics Uniform Bank Performance Reports, as of December 2009, Louisiana had a 2 ranking with 1.01 percent return on assets; a 1 ranking in sub S banks return on assets .84 percent; 2 ranking with .40 percent net charge offs and 5 in non-current loans (loans that are over 90 days past due) at 2.04 percent. Nationwide percentages are .23 percent, .16 percent, .78 percent and 2.3 percent, respectively. A 12 ranking is the worst.

Under the terms of the agreement with the FDIC, Home Bank will acquire approximately $225 million of assets, including approximately $150 million of loans (before loan discounts). Home Bank will assume approximately $225 million in deposits and certain other liabilities. The loss sharing agreement between the FDIC and Home Bank covers substantially all acquired loans and foreclosed real estate.

Home Bank assumed the outstanding deposits of Statewide Bank for no premium and acquired the assets at an $11.9 million discount.  The FDIC will cover 80 percent of the losses on the disposition of loans and foreclosed real estate up to $41.0 million and it will cover 95 percent of the losses that exceed $41.0 million. This transaction is expected to be accretive to net income, diluted earnings per share, book value per share and tangible book value per share. The valuation and purchase price of acquired assets and liabilities will be determined upon completion of adequate valuation appraisals.