Bank failures in Utah, Maryland and Florida late Friday brought the total for 2009 to six.
First, Utah's Department of Financial Institutions closed MagnetBank in Salt Lake City. Later, the Office of Thrift Supervision shut Suburban Federal Savings Bank in Crofton, Md. after failing to find a buyer to recapitalize it. The Office of the Comptroller of the Currency closed Ocala National Bank in Ocala, Fla.
The Federal Deposit Insurance Corp. said in a press release that it had tried to find a buyer for the $292.9 million asset MagnetBank but could not. The bank had no uninsured funds, the FDIC said. It will begin returning the $282.8 million worth of deposits to customers Monday morning. It estimated the cost of the bank's failure at $119.4 million.
MagnetBank, a commercial lender founded in 2005, received a cease and desist order from the FDIC in Oct. 2008. The agency ordered the bank at that time to replace its management and board of directors, and cited its "large volume of poor quality loans."
A spokesman for the FDIC said the last time the agency could not find a buyer for a bank was on Feb. 14, 2004, after the failure of Dollar Savings Bank in Newark, N.J.
The $360 million-asset Suburban, critically undercapitalized, had until Friday to come up with a plan to sell itself, according to an Office of Thrift Supervision order dated Jan. 21. A deal it struck with the Dutch insurance company Aegon NV fell through in December after Aegon withdrew its application be a thrift holding company.
Suburban had been operating under a cease-and-desist order since March, and reported on Sept. 30 that 11.45% of its loans were noncurrent. It focused its business mostly on single-family mortgage loans. A statement from the OTS said Suburban's problems "resulted from the failure of the Board of Directors and managers to oversee an aggressive lending program that began in 2005. The program included reduced documentation, single-family loans and expanded into residential acquisition and development, construction loans and land loans." Bank of Essex, Tappahannock, Virginia will take over Suburban's deposits and is buying $348 million worth of Suburban's assets at a $45 million discount.
The FDIC estimated the cost of Suburban's failure to be $126 million.
The OCC shut Ocala National Bank, which had assets of roughly $223.5 million and deposits of $205.2 million, due to "excessive levels of problem loans, foreclosures, and other-real-estate-owned losses," according to a spokesman for the agency. He added that the losses had rendered the bank insolvent. "The problem loans were in commercial real estate concentrations and residential development and construction in a market that was severely overbuilt."
CenterState Bank of Florida, in Winter Haven is acquiring all of Ocala National Bank's deposits. The FDIC said in a statement that $17.2 million in brokered deposits would be paid separately to brokers for their insured amounts. The agency estimated the cost of Ocala National Bank's failure at $99.6 million.
