The State of Maryland, which has not had a banking failure since November 2010, saw two banks collapse today as regulators closed the HarVest Bank of Maryland and the Bank of the Eastern Shore. Since the start of the banking crisis in 2008, Maryland has had a total of only 8 banking failures compared to a nationwide total of 435 bank failures.
After state regulators closed the HarVest Bank of Maryland, Gaithersburg, MD, the FDIC was appointed as receiver and sold the failed bank to Sonabank, McLean, Virginia, which will protect depositors by assuming all deposits of failed HarVest Bank.
HarVest Bank, formed in 2003, was locally owned and operated. Bank management had predicted that HarVest Bank would become the region’s “first choice for all banking needs” based on the Bank’s commitment to personalized service and an understanding of local customers that big banks in the area did not possess. Unfortunately, a banking crisis, collapsing real estate values and the inability of small banks to raise capital all combined to lead to the Bank’s failure.
All four branches of HarVest Bank will reopen as branches of Sonabank and FDIC deposit insurance will continue up to the applicable limits. Customers of failed HarVest Bank have access to their money over the weekend through the use of checking, ATMs and debit cards.
At December 31, 2011, HarVest Bank of Maryland had total assets of $164.3 million and total deposits of $145.5 million. Sonabank, in addition to assuming all deposits of HarVest Bank, also agreed to purchase all assets of the failed bank.
Sonabank is owned by holding company Southern National Bancorp of Virginia, Inc, a publicly traded company. Sonabank was opened in 2003 and is a full service community bank with over $600 million in assets. Southern National Bancorp has been profitable for the past two years although its stock price is still below values seen prior to the banking crisis.
The cost to the FDIC Deposit Insurance Fund for the failure of HarVest Bank is $17.2 million. HarVest Bank becomes the nation’s 19th banking failure of 2012 and the second in Maryland.