Slavie Federal Savings Bank, Bel Air, Maryland, became the ninth banking failure of 2014 as the Office of the Comptroller of the Currency closed the insolvent bank. The FDIC, appointed as receiver, sold the failed bank to Bay Bank, FSB, Lutherville, Maryland, which will assume all deposits of failed Slavie Federal.
The severe banking crisis that started in 2008 is still wreaking financial havoc on many small banks that were never able to recover from the legacy of defaults and poor lending decisions. Six years after the financial crisis began there are still 411 FDIC insured institutions on the Problem Bank List, most of them small banks with an average of $306 million in assets.
Many of the 498 banks that failed since 2008 had been in business for decades and survived financial panics, depression, and recessions but the banking crisis and collapsing property bubbles of the 2008 financial meltdown proved too much to handle. Slavie Federal Savings, founded in 1900, is an example of how even century old banks can wind up on the Failed Bank List.
Slavie Federal Savings Bank was founded as a community bank and served Baltimore City for over one hundred years. According to the Bank’s website, “At Slavie, we emphasize service quality above all else. We pride ourselves on providing the competitive products found at large financial institutions, but with the personal service you can only get from a community bank.”
Slavie Federal had two branches, both of which will reopen as branches of Bay Bank. All depositors of Slavie Federal will automatically become depositors of Bay Bank and FDIC deposit insurance protection will continue uninterrupted up to the applicable limits.
Over the weekend depositors of Slavie Federal can access their funds through the use of checks, ATMs, and debit cards. Customers who have questions regarding the Bank’s closing can call the FDIC directly at toll free 1-800-613-0378.
At March 31, 2014, Slavie Federal had total assets of $140.1 million and total deposits of $111.1 million. Bay Bank agreed to pay the FDIC a premium of 0.20% on deposits assumed from Slavie Federal. In addition to assuming all deposits, Bay Bank agreed to purchase $129.9 million of the failed bank’s assets with the balance being held by the FDIC for future disposition.
The cost to the FDIC deposit insurance fund for the failure of Slavie Federal is $6.6 million. Selling a failed bank to another institution is the least costly manner in which to resolve a failed bank according to the FDIC.
Slavie Federal Savings Bank becomes the ninth banking failure of 2014 and the first in Maryland. The last bank failure in Maryland occurred on April 27, 2012 when the Bank of the Eastern Shore was closed by regulators.