WASHINGTON — The Federal Deposit Insurance Corp. announced the closure of the $15.8 million-asset Metropolitan Savings Bank in Pittsburgh on Friday.
The state-chartered bank, established in 1892, had “significantly impaired” capital and was “operating in an unsafe and unsound condition to transact business,” according to a written order obtained by American Banker.
The order, which was filed in the Court of Common Pleas of Allegheny County by the Pennsylvania Department of Banking, also said Metropolitan Savings “has refused to cooperate and submit records and affairs to duly authorized examiners in connection with a lawful examination and investigation.”
The FDIC said the bank’s $12 million of insured deposits would be assumed by Allegheny Valley Bank of Pittsburgh. At the time of the closure Metropolitan Savings had about $1.2 million of uninsured deposits in about 70 accounts, the FDIC said.
An FDIC spokesman said the agency does not know how much the failure will cost the Deposit Insurance Fund.
The failed bank had one office, which will reopen today as a branch of Allegheny Valley, the FDIC said. A woman who answered the phone at Metropolitan Savings referred questions to an official with the FDIC.
The failure brought an unprecedented two-and-a-half-year streak to an end. Friday was the 952nd day since the FDIC closed the $46.4 million-asset Bank of Ephraim in Utah on June 25, 2004. The run easily surpassed the previous record, which ended in September 1946 after 609 days.
The Utah bank had been hurt by bad loans, including those made to a well-known polygamist community, as well as fraud. About a month before the failure, two men, including a former bank employee, were indicted for having allegedly defrauded Bank of Ephraim since the 1980s.
Since then, in a healthy credit environment, the FDIC enjoyed nine straight quarters without a resolution, including five quarters of record earnings. The streak held strong despite an inverted yield curve, the slowdown in the housing market, and the economic challenges faced by Gulf Coast banks after hurricanes Katrina and Rita ravaged the region in the summer of 2005.
But recent signs have pointed to a weakening of asset quality, as FDIC officials noted in November in the agency’s quarterly report of industry earnings.
“If I were going to characterize the overall state of the credit cycle for FDIC-insured institutions, I would say that we appear to be just past the peak of credit performance,” Richard Brown, the agency’s chief economist, said in a press briefing to present the report.
The FDIC said that Allegheny Valley has agreed to pay the agency a premium of 6% for the assumed deposits.
Metropolitan Savings is the first Pennsylvania bank to fail since Pulaski Savings Bank in Philadelphia closed Nov. 14, 2003.
