From: To: jeevacation(ei2ginail.com Subject: Lydian Date: Fri, 19 Aug 2011 22:36:12 +0000 Palm Beach-based Lydian Private Bank fails By Jeff Ostrowski Palm Beach Post Staff Writer Updated: 6:08 p.m. Friday, Aug. 19, 2011 Posted: 5:05 p.m. Friday, Aug. 19, 2011 Lydian Private Bank was born during one bubble and died in the aftermath of another. Federal regulators Friday closed Palm Beach-based Lydian in a bank failure that's expected to cost the Federal Deposit Insurance Corp.'s Deposit Insurance Fund $293.2 million. Lydian's five branches will open Monday as offices of Sabadell United Bank of Miami. Lydian Private Bank customers' deposits will be transferred to Sabadell United Bank, the FDIC said. Lydian Private Bank had $1.7 billion in assets and $1.2 billion in deposits as of June 30 - totals that made it the largest financial institution headquartered in Palm Beach County. It also managed $1.2 billion through its wealth advisory business. The FDIC and Sabadell United Bank agreed to a loss-share arrangement for $907.1 million of Lydian Private Bank's assets. Lydian Private Bank was founded as VirtualBank in early 2000, as the dot-com bubble raged. The bank was profitable through 2007 but began losing money in 2008. Lydian posted losses of $18.9 million in 2010 and $15.9 million in the first quarter of 2011. As the losses accelerated, so did questions about Lydian's ability to survive. The federal Office of Thrift Supervision last year issued a cease-and-desist order that criticized Lydian on a variety of fronts. Regulators said Lydian had an Inadequate level of capital" and must hire "experienced and qualified managers and lending staff." The order also said Lydian's board "failed to exercise adequate supervision" and cited the bank for filing inaccurate financial reports. In another blow, research firm BauerFinancial downgraded Lydian's safety rating to zero stars, its lowest grade, as the bank's capital disappeared. Lydian executives h