First failed bank since 2017 will leave FDIC with hefty price tag

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Regulators closed The Enloe State Bank in Texas late Friday, marking the first bank failure in 17 months and the first in the Lone Star State in over five years.

The Federal Deposit Insurance Corp. said it sold the failed bank's insured deposits to Legend Bank in Bowie, Texas. The Enloe State Bank had $36.7 million in assets and $31.3 million in deposits. The FDIC said about $500,000 of the deposits exceeded FDIC insurance limits.

“This estimate is likely to change once the FDIC obtains additional information from these customers,” the agency said in a press release, referring to the uninsured deposits.

Legend Bank, which had $705.6 million in assets on March 31, assumed the insured deposits at a 0.51% premium. The acquiring bank will also purchase about $5.2 million of The Enloe State Bank’s assets. The FDIC will hold the remaining assets for later disposition.

The failure — the nation's first since December 2017 — is estimated to leave the FDIC with a hefty price tag relative to the size of the bank. The agency projected the failure will cost the Deposit Insurance Fund roughly $27 million, amounting to over 73% of the failed bank's asset size.

The Texas Department of Banking closed the bank and appointed the FDIC as the receiver.

This was the first failure since the FDIC closed Washington Federal Bank for Savings in Chicago. The last failure in the Lone Star State was Texas Community Bank in The Woodlands in December 2013.

The Enloe State Bank has one branch in Cooper, Texas, that will reopen as Legend Bank on Monday.