Four Banks Closed In Maryland, New York And Oklahoma

July 9, 2010 – Regulators closed four banks today – two in Maryland and one in New York and Oklahoma.  The four banks had a total of 19 branches and $1.1 billion in assets.  The estimated loss to the FDIC Deposit Insurance Fund for the four banking failures amounted to $159.9 million.

Three of the failed banks were acquired by other institutions from the FDIC under purchase and assumption agreements.  The  FDIC could not find a buyer for the fourth bank, Ideal Federal Savings Bank of Baltimore, Maryland.  Ideal Federal depositors will be paid off and the bank liquidated by the FDIC, acting as receiver.

The unusual aspect of this week’s bank closings was that only one of the three failed institutions sold by the FDIC involved the use of a loss-share agreement.   The FDIC’s use of loss-share agreements has been criticized for provided very generous terms to the acquiring banks.   Many of the institutions that acquired failed banks from the FDIC had very limited loss exposure and sometimes reaped huge windfall profits on the failed bank purchase (see FDIC Loss-Share Guarantees Put Taxpayers At Risk and OneWest Makes Billions On Failed Bank Purchases).

The week’s largest and 90th banking failure was Home National Bank of Blackwell, Oklahoma with $644.5 million in assets.   Home National was acquired by RCB Bank, Claremore, Oklahoma, and all 15 branches of failed Home National will reopen on Monday as branches of RCB Bank.  All deposits of Home National were acquired by RCB as well as $340.7 million of the failed bank’s assets.  No loss-share agreement was entered into on the purchase of the assets.

In a separate transaction, the FDIC sold $260.8 million of Home National’s assets to Enterprise Bank & Trust, Clayton, Missouri.    The FDIC will retain the remaining $43 million of Home National’s assets for later disposition.  Home National was the first banking failure in Oklahoma this year and the loss to the FDIC Deposit Insurance Fund is estimated at $78.7 million.

USA Bank, Port Chester, New York, was the week’s 89th banking failure.   USA Bank was acquired by New Century Bank, Phoenixville, PA, under a purchase and assumption agreement with the FDIC.  New Century agreed to assume all deposits and purchase all of the assets of failed USA Bank.  The FDIC and New Century entered into a loss-share transaction on $159.1 million of USA Bank’s assets.   USA Bank at March 31, 2010 had a total of $193.3 million in assets and $189.9 million in deposits.    The sole branch of USA Bank will reopen Monday as a new branch of New Century.   The cost to the FDIC for closing USA Bank is estimated at $61.7 million.  USA Bank is the third banking failure in New York this year.

Ideal Federal Savings Bank of Baltimore, Maryland, was closed by the Office of Thrift Supervision.  The FDIC, as receiver, could not find a buyer for this tiny one branch bank with only $6.3 million in assets and $5.8 million in deposits.   Accordingly, the FDIC will payoff depositors of Ideal Federal and liquidate the bank.  Customers of Ideal Federal will not have access to their accounts until Monday and have until July 24 to claim their deposits.   After July 24th, remaining funds will be mailed to depositors of record.   The cost to close Ideal Federal is estimated at $2.1 million.  Ideal Federal is the nation’s 88th banking failure this year and the third in Maryland.

Bay National Bank, Baltimore, Maryland, was the 87th banking failure this year and the second banking failure in Maryland this week.   Bay National was acquired from the FDIC by Bay Bank, FSB, Lutherville, Maryland.  Bay Bank will assume all deposits and purchase all assets of failed Bay National.  No loss-share transaction was announced by the FDIC on the sale of Bay National’s assets.

Bay National had $282.2 million in total assets and $276.1 million in deposits at March 31, 2010.  The two branches of Bay National will reopen on Monday as branches of Bay Bank.  The estimated cost to the FDIC for the failure of Bay National is estimated at $17.4 million.