Three more banks succumbed on January 30. Two of them—Suburban Federal Savings Bank, in Crofton, MD, and Ocala, FL-based Ocala National Bank—had buyers. Salt Lake City’s MagnetBank did not. Instead, the Federal Deposit Insurance Corp. okayed the payout of the bank’s insured deposits, estimated at $282.8 million, with checks going out on February 2. The cost to the FDIC’s Insurance Deposit Fund was put at around $119.4 million.
Why not wait for a deal, a la IndyMac? “We had sufficient time to market Magnet,” says FDIC spokesman David Barr. The agency “contacted more than 320 potential bidders and received no bids. With IndyMac, we did not have sufficient time to market the bank. MagnetBank also had substantially all of its deposits from brokers, as a result, it had little to no franchise value. Even if we ran it, like IndyMac, that would not have preserved or enhanced value. IndyMac had more than 30 branches and a core depositor base,” Barr explains.