Until today, the State of Tennessee, had seemed isolated from the banking crisis. For almost a decade, there were no banking failures in Tennessee, with the last one occurring on November 8, 2002.
Tennessee’s luck came to an abrupt halt today with the closing of two banks – Tennessee Commerce Bank of Franklin, TN and BankEast of Knoxville, TN. The combined assets of the two failed banks weighed in at a substantial $1.5 billion and the failure of Tennessee Commerce was the first billion dollar bank failure of 2012.
BankEast was shuttered today by state regulators who appointed the FDIC as receiver. In order to protect depositors, the FDIC sold the failed bank to U.S. Bank N.A., Cincinnati, Ohio, which assumed all deposits of BankEast.
BankEast had 10 branches which will all reopen on Monday as branches of U.S. Bank and depositors will continue to have full FDIC insurance coverage on all deposits up to applicable limits. Over the weekend, depositors of BankEast will continue to have full access to their money through the use of checking, ATM and debit cards.
Founded in 1968, BankEast seemed to follow a slow and conservative growth path and total assets of the Bank amounted to only $50 million in 2003. Starting in 2004, lending and asset growth began to grow exponentially and by 2008, total assets expanded to $368 million under an aggressive loan growth policy. The apparent change in business strategy seemed to coincide with the purchase of both BankEast and Curtis Mortgage Company by bank holding company BankEast Corporation in 2004.
Starting in 2009, the aggressive lending policies of BankEast resulted in a rapid increase in loan defaults as the real estate bubble collapsed. In April 2009, the Federal Reserve and BankEast entered into a written agreement which addressed numerous deficiencies in the Bank’s operations and financial management. BankEast was unable to properly address deficiencies or raise additional capital and regulators were forced to close the Bank.
At September 30, 2011, BankEast had total assets of $272.6 million and total deposits of $268.8 million. In addition to assuming all deposits, U.S. Bank also agreed to purchase all assets of failed BankEast.
The loss to the FDIC Deposit Insurance Fund resulting from the failure of BankEast is $75.6 million. BankEast is the 7th banking failure of the year and the second in Tennessee.
i had this bank in my town and they messed my home loan up,and the bank sold.