In the third bank failure this year, East Texas National Bank in Marshall was shut down Friday by the Office of the Comptroller of the Currency.
The $127 million-asset bank's failure was the result of poor asset quality, the OCC said. Inferior credit underwriting and loan administration practices, as well as insufficient supervision by its board of directors, were to blame.
East Texas is expected to cost the Bank Insurance Fund $6.2 million. In a deal struck with its receiver, the Federal Deposit Insurance Corp., East Texas' three offices will reopen today as part of $260 million-asset Fredonia State Bank of Nacogdoches, Tex.
Fredonia bought $114 million of the failed bank's assets at a $5.5 million discount. It will assume all $113 million of deposits.
It was the first bank failure in Texas since 1996.