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Omni National Bank Closed by Regulators

Stocks in this article: STIOFSI.PK

Updated from 4:03 p.m. EDT

Omni National Bank of Atlanta was closed by federal regulators on Friday, the twenty-first U.S. bank or thrift closed during 2009.

Omni National, held by Omni Financial Services, had "experienced substantial dissipation of assets and earnings due to unsafe and unsound practices," the Office of the Comptroller of the Currency said in a press release. The holding company's shares were trading on the pink sheets for 2.5 cents before the announcement.

The failed bank was the ninth Georgia institution to fail out of the 46 bank and thrift failures during 2008 and 2009. Georgia now has the most failures during this period, with California running a close second, with eight failures.

The Federal Deposit Insurance Corp. was appointed receiver, and appointed SunTrust Bank, held by SunTrust Banks Inc. (STI) to act as paying agent on behalf of the receivership, running the former Omni National Bank's six branches until April 27.

This is the first arrangement of this type during the current crisis. Under the agency's agreement with SunTrust, Omni's insured depositors will have until April 27 to either move their money to a new account with SunTrust or withdraw their money.

The FDIC announced that uninsured deposits of approximately $2 million were not covered by arrangement with SunTrust. The agency also announced that $320 million in brokered deposits would be paid directly to brokers.

When a bank fails and brokered deposits aren't acquired, brokers are required to file paperwork with the FDIC, since the brokered deposit accounts are kept in the name of the broker. The FDIC then cross-checks the brokered account information against any retail deposits the customers may also have with the failed institution to see if the customers' total deposits exceed insurance limits.

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