September 17, 2010 – Maritime Savings Bank, West Allis, Wisconsin, was closed today by the Office of Thrift Supervision, which appointed the FDIC as receiver. The FDIC sold failed Maritime Bank to North Shore Bank, FSB, Brookfield, Wisconsin, which will assume all the deposits but only about half of the failed bank’s assets. Maritime Savings was one of the Wisconsin’s oldest banks, founded in 1912.
North Shore Bank was founded in 1923, has assets of over $1.7 billion, 44 offices and is profitable. In a press release North Shore stated that:
North Shore today announced that it has entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) to assume the deposits of West Allis-based Maritime Savings Bank. The transaction is effective immediately, and under the terms of the agreement, North Shore Bank will purchase selected Maritime Savings Bank assets and assume most of the deposits. No depositor will lose any money as a result of this transaction.
North Shore Bank President and CEO James McKenna said deposits will be protected in the transaction. All deposits assumed by North Shore Bank will continue to be insured to the limits of FDIC coverage and will be backed by North Shore Bank, which is among the strongest banks.
North Shore Bank is one of the strongest banks in the country, and Maritime Savings Bank is a great fit. This acquisition allows us to serve more customers and sets the stage for the combined organization’s continued success.”
At June 30, 2010, Maritime Savings Bank had total assets of $350.5 million and total deposits of $248.1. North Shore did not pay the FDIC a premium to assume Maritime’s deposits.
North Shore Bank agreed to purchase only $177.6 million of Maritime’s assets that it considered to be high quality loans as indicated by the fact that there was no loss-share agreement on the purchased assets. The FDIC will have no liability for losses on the assets of Maritime that North Shore agreed to purchase. The $172.9 million of Maritime’s assets that could not be sold will be retained by the FDIC for later disposition.
The low quality of the assets retained by the FDIC is reflected in the loss that the FDIC is taking on the closing of Maritime Bank. The cost of failed Maritime Bank is estimated at $83.6 million or a staggering 48% of the $172.9 million of junk loans that the FDIC is stuck with. As of June 30, 2010, the FDIC was holding $50.5 billion of assets from failed banks that it was unable to sell when the banks failed. In a recent sale of some failed bank assets by the FDIC, the effective sales price was 31 cents on the dollar.
Maritime Savings is the 125th banking failure this year and the first in Wisconsin.