Regulators in the U.S. shuttered two banks and one savings and loan Friday, bringing the tally of failed institutions in 2009 to six. The Federal Deposit Insurance Corporation was named receiver all three companies. The Utah Department of Financial Institutions shut down Magnet Bank of Salt Lake City. Unable to find a buyer for the bank's deposits, the FDIC is liquidating the bank and will mail checks to retail depositors on Monday morning. Meanwhile, the Office of the Comptroller of the Currency closed Ocala National Bank of Ocala, Fla., and the FDIC arranged for all deposits to be assumed by CenterState Banks of Florida ( CSFL)), based in Winter Haven, Fla. And the Office of Thrift Supervision shuttered Suburban Federal Savings Bank of Crofton, Md., with the Bank of Essex of Tappahannock, Va. assuming all deposits.
The FDIC estimated that Magnet Bank had no uninsured deposits, although the final determination could not be made until brokers provided the FDIC with customer information. When a bank or savings and loan institution with brokered deposits fails, the FDIC asks the brokers to list their customers and deposit amounts. Since brokered CDs are registered with a bank or S&L only in the name of the broker, the FDIC needs the brokers to provide detailed customer account information for the agency to cross-check with other broker lists and the bank's retail deposits to make sure that a customer's total deposits with the failed institution don't exceed insurance limits. It can take customers with brokered deposits a few weeks to get their money back. FDIC spokesman David Barr said that the last time the agency was unable to find a buyer for (at least) the insured deposits of a failed institution was on Feb. 14, 2004, when Dollar Savings of Newark, N.J. failed. The liquidation of Magnet Bank's deposits will be relatively simple, since the institution had no transaction accounts when it failed. If it had, the FDIC would have processed all checks presented for collection on the evening following the closing. Any checks that didn't clear would be returned with a notice saying the bank was closed, not that there were insufficient funds. Accounts would then be balanced so the FDIC could send customers checks for their insured balances promptly. Mr. Barr confirmed that the FDIC had done this before and was well-prepared to handle such a scenario.
All of Suburban Federal's deposits were acquired by Bank of Essex of Tappahannock, Virginia, with the failed thrift's branches set to reopen Saturday under the Bank of Essex name. Suburban Federal had total assets of $360 million and deposits of $302 million as of Sept. 30. The institution had been assigned an E- financial strength rating by TheStreet.com Ratings in January, a downgrade from the D- rating assigned in March 2007. With a continued slide in residential and construction loan quality through the first three quarters of 2008, the institution reported losses exceeding $10 million and was considered critically undercapitalized as of Sept. 30, with leverage and risk-based capital ratios of 1.33% and 3.09%, respectively.