Peoples State Bank, Hamtramck, MI, was closed today by the Michigan Office of Financial and Insurance Regulation, which appointed the FDIC as receiver. The FDIC sold the failed bank to First Michigan Bank, Troy, Michigan, which will assume all deposits of Peoples State.
The ten branches of Peoples State will reopen as usual on Saturday as branches of First Michigan and depositors will have full access to their money over the weekend via checking, ATM or debit cards.
Peoples State was a well established, mid sized Michigan bank, formed in 1909. According to the Company’s website, “Peoples State Bank is a locally owned and managed community bank that has been providing financial services to consumers and businesses in the southeast Michigan area for nearly 100 years. In 2008, for the fourth time in recent years, we were named one of Metropolitan Detroit’s 101 Best and Brightest Companies to Work For. We care about our people, our customers and our communities”.
The stock of PSB Group, Inc., the holding company for Peoples State Bank, has been in a downward spiral since 2008, closing at $.01 cent today. PSB Group shares, once valued at approximately $66 million, are now worthless.
The FDIC had issued an Order to Cease and Desist to Peoples State on September 18, 2009, for engaging in “unsafe or unsound banking practices”.
Peoples State, at December 31, 2010, had total assets of $390.5 million and total deposits of $389.9 million. First Michigan will pay the FDIC a premium of 0.25% for the deposits of Peoples State.
First Michigan also agreed to purchase all of the assets of Peoples State Bank subject to a loss-share transaction on $331.0 million of the acquired assets. According to the FDIC, losses are minimized by keeping the assets in the private sector and avoids disruptions to loan customers.
First Michigan previously acquired CF Bancorp in April 2010, and First Banking Center in November 2010. First Michigan is a well capitalized, privately held community bank with $1.3 billion in assets. Prior to purchasing CF Bancorp, First Michigan had raised $200 million of fresh capital through a private placement transaction. One of the lead investors in First Michigan is billionaire Wilbur Ross, who previously profited in the last banking crisis by making shrewd acquisitions of failed banks.
The failure of Peoples State Bank is the 16th banking failure in the nation and the first in Michigan. The cost to the FDIC Deposit Insurance Fund for the failure of Peoples State Bank is $87.4 million.