WASHINGTON - The Federal Deposit Insurance Corp. on Tuesday announced what it termed its first open-bank assistance deal of the year, involving a bank in Texas with $21.6 million in assets.
In an open-bank transaction, the agency provides funds to keep a sick bank alive, in hopes of producing a turnaround. It did three open-bank deals in 1991.
The FDIC said it decided that injecting $360,970 into Freedom Bank of Ranger, Tex., would be less costly than closing the bank and liquidating its assets. Freedom's shareholders were wiped out in the FDIC action.
Freedom is being sold to Peoples State Bank of Clyde, Tex.
Over the next five years, Peoples State will get the money recouped from sales of Freedom Bank's bad assets. After 1997, the FDIC will get 50% of all recoveries on Freedom's problem loans.