October 22, 2010- There are likely to be some shell shocked depositors tonight at First Arizona Savings, A FSB, Scottsdale, Arizona, who stand to lose $5.8 million in uninsured deposits. After the Office of Thrift Supervision closed First Arizona and appointed the FDIC as receiver, the FDIC was unable to find a buyer for failed First Arizona.
Typically, when a bank fails and the FDIC finds a buyer for the failed bank, the acquiring bank will assume all deposits, regardless of whether or not they exceed FDIC insurance limits. When the FDIC cannot find a buyer, however, uninsured depositors are subject to the insurance limits allowed by law and uninsured deposits will not be reimbursed by the FDIC. (See Should I Keep Money In A Problem Bank and Are My Savings FDIC Insured?)
Depositors of First Arizona can verify the insurance status of their accounts by clicking on the following link – Is My Account Fully Insured? or by calling the FDIC at 1-800-830-4698. Uninsured depositors at First Arizona will receive a Receiver Certificate from the FDIC which allows uninsured depositors to share proportionately in any funds recovered through the disposal of First Arizona’s assets. There is no way of knowing when or if an uninsured depositor will ever recover any part of uninsured deposits.
In accordance with Federal law, the order of claims priority on a bank failure is as follows:
Depositors General Unsecured Creditors Subordinated Debt Stockholders
Depositors with insured funds will be mailed a check on Monday by the FDIC.
First Arizona Savings had been issued a Cease and Desist Order by the Office of Thrift Supervision on November 2, 2009, which prohibited certain actions by the Bank and required an increase in capital. The Bank was unable to raise additional capital which resulted in today’s closing by regulators. As discussed previously on Problem Bank List, issuance of a Cease and Desist Order should prompt immediate action by depositors to ensure that their savings are safe.
First Arizona Savings had $272.2 million in total assets and $198.8 million in total deposits at June 30, 2010. The cost to the FDIC for closing First Arizona is estimated at $32.8 million. First Arizona is the 139th banking failure this year and the third in Arizona. There were 140 banking failures in 2009.
Hopefully this will be a wake-up call to the other banks in AZ that they should be implementing the TACT Program to strengthen their balance sheets.
It is such an obvious solution, and yet so much resistance to invite the private mortgage lenders in for help on how they solved their foreclosure problems.
i’m a depositor there and never received any sort of notification that the bank was operating under a cease and desist order. outrageous. fortunately, it’s all insured.