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Desert Hills Bank Closed by Regulator

Sedona AZ (March 29, 2010) – New York Community Bank, Westbury, New York, assumed all of the deposits of Desert Hills Bank of Phoenix, Arizona, and became the talk of the town for Sedona, Arizona, and its Village of Oak Creek community. Two of the six Desert Hills bank branches are located in Sedona. 

Sedona resident and former Arizona candidate for U.S. Congress Brent Maupin said, “Among other local banks, I have an account with Desert Hills and am acquainted with its president (Maupin is a licensed architect and civil engineer in four states with a Sedona office and home). As a businessman, this news caught me by surprise but as long as the bank branch reopens quickly, I doubt the transition will cause me any problems as a customer. It’s always been a convenient location so I’ll stay, at least for now with the new ownership.” 

Desert Hills Bank was closed March 27, 2010, by the Arizona Department of Financial Institutions which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with New York Community Bank to assume all of the deposits of Arizona bank.

The six branches of Desert Hills Bank will reopen on Monday as branches of New York Community Bank. Depositors of Desert Hills Bank will automatically become depositors of New York Community Bank. Deposits will continue to be insured by the FDIC so there is no need for customers to change their banking relationship to retain their deposit insurance coverage.

Customers should continue to use their former Desert Hills Bank branches until they receive notice from New York Community Bank that it has completed systems changes to allow other New York Community Bank branches to process customer accounts as well.

This evening and over the weekend depositors of Desert Hills Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make payments as usual.

As of December 31, 2009, Desert Hills Bank had approximately $496.6 million in total assets and $426.5 million in total deposits. New York Community Bank did not pay the FDIC a premium to assume all of the deposits of Desert Hills Bank. In addition to assuming all of the deposits, New York Community Bank agreed to purchase essentially all of the failed bank’s assets.

The FDIC and New York Community Bank entered into a loss-share transaction on $325.9 million of Desert Hills Bank’s assets. New York Community Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, please visit: http://www.fdic.gov/bank/individual/failed/lossshare/index.html.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-886-2504. The phone number will be operational this evening until 9:00 p.m. Mountain Standard Time (MST); on Saturday from 9:00 a.m. to 6:00 p.m. MST; on Sunday from noon to 6:00 p.m. MST; and thereafter from 8:00 a.m. to 8:00 p.m. MST. Interested parties also can visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/deserthills.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $106.7 million. New York Community Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives.

Desert Hills Bank is the 41st FDIC-insured institution to fail in the nation this year and the first in Arizona. The last FDIC-insured institution closed in the state was Valley Capital Bank, N.A., Mesa, Arizona on December 11, 2009.

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation’s banking system. The FDIC insures deposits at the nation’s 8,012 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed.

The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

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