A small bank in West Virginia has become the first institution to fail during the coronavirus crisis, though the bank had been experiencing difficulties since 2015 and its 2019 capital levels were too low, the Federal Deposit Insurance Corp. announced Friday. The First State Bank of Barboursville, with $152 million in total assets, was closed Friday by the West Virginia Division of Financial Institutions. The bank's $139.5 million in deposits will be acquired by MVB Bank Inc. of Fairmont, W. Va. The four branches of The First State Bank were set to reopen as branches of MVB Bank on Saturday, the FDIC said.

-Greg Robb

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(END) Dow Jones Newswires

April 04, 2020 20:03 ET (00:03 GMT)

By Luisa Beltran 

President Donald Trump will ask Congress for more funds if the Small Business Administration runs out of money while helping companies struggling in the current Covid-19 recession.

On Friday, thousands of small businesses flooded the websites of lenders like Wells Fargo (ticker: WFC) and PNC (PNC). The companies were seeking aid from the SBA, which is offering $350 billion in loans to stop small businesses from laying off their employees.

"It's been flawless so far, beyond our expectations," Trump said Saturday during his daily coronavirus briefing.

Small businesses are the lifeblood of the U.S. economy, and they are extremely vulnerable -- nearly two-thirds have already temporarily shut down or plan to in the next two weeks, according to a study by MetLife (MET) and the U.S. Chamber of Commerce. Most need money -- immediately.

The SBA had made 17,503 loans valued at $5.4 billion, Jovita Carranza, the SBA's administrator, said in a tweet Friday evening. However, the bailout has been mired by complaints that banks weren't ready and didn't receive needed guidance in time to process the loans. The SBA couldn't immediately be reached for comment.

When asked about the problems, Trump said: "I didn't hear of any glitch. They've done billions of dollars [in loans] to small businesses. These are loans to get businesses back."

The bailout comes as Covid-19 continues to ravage the U.S. economy. Businesses across the U.S. have closed in an attempt to stop the spread of the virus. The virus has also upended the U.S. stock market, causing it to recently post its worst day since the 1987 stock market crash. Congress on March 27 passed the $2 trillion Cares Act, which was meant to provide a jolt to the economy. The law authorized the SBA to guarantee $350 billion in loans to small businesses via a network of more than 800 banks.

Some have also said the $350 billion won't be enough to help small businesses. Trump, during his briefing, appeared to realize the SBA may have to step up again. "If we run out of money, I will ask Congress for more money. When we open, we want to open strong."

Write to Luisa Beltran at luisa.beltran@dowjones.com

(END) Dow Jones Newswires

April 04, 2020 19:22 ET (23:22 GMT)

By Ben Eisen 

Wells Fargo & Co. substantially curtailed its program for making large loans this week, one of the most pronounced signs yet of how the recent market turmoil is cutting off access to some types of mortgages.

America's largest mortgage lender will only refinance jumbo mortgages for customers who hold at least $250,000 in liquid assets with the bank, according to a bank spokesman. The change is effective immediately.

That means that a customer who already has a jumbo loan with Wells Fargo can't refinance to take advantage of falling rates unless they keep money with the bank. The bank hasn't changed policies for loans used to purchase properties.

A jumbo loan is one considered too big to be sold to government mortgage corporations Fannie Mae and Freddie Mac. In most markets, it must be larger than $510,400 this year, but in the highest-cost areas it must be larger than $765,600.

Wells Fargo extended more residential mortgages than any other lender last year, according to industry-research group Inside Mortgage Finance. It was also the biggest lender for jumbo loans, extending some $70 billion of them in 2019.

Conventional loans that are guaranteed by Fannie Mae or Freddie Mac are still widely available. But loans without government backing, like jumbo loans, have been harder to come by during the recent market fluctuations because there has been limited appetite for investors to buy these loans.

Reflecting this, the average interest rate on a 30-year jumbo mortgage on Friday was 3.86%, well above the 3.44% on a conforming mortgage, according to indexes kept by Optimal Blue LLC. These are typically closely aligned during more normal periods.

Some banks don't sell jumbo loans to investors, but rather keep them on their balance sheets. Wells Fargo faces limitations on its ability to do so. Since 2018, the Federal Reserve has capped the bank's total assets because of risk-management failures tied to its fake-accounts scandal. That gives it limited flexibility to make loans that it holds onto.

"These difficult business decisions reflect efforts to prioritize how we serve customers and maintain prudent balance sheet discipline," the bank spokesman said Saturday.

The bank also said earlier this week that it would stop purchasing all jumbo loans made by third-party mortgage bankers. Its third-party mortgage business, known as correspondent lending, amounted to about one fifth of its total business in the final three months of 2019, according to Inside Mortgage Finance.

Write to Ben Eisen at ben.eisen@wsj.com

(END) Dow Jones Newswires

April 04, 2020 18:01 ET (22:01 GMT)