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.
As for the other failed institutions, Suburban Federal’s seven branches reopened under the ownership of Tappahanock, VA-based Bank of Essex, which agreed to assume $302 million of deposits and $348 million of Suburban’s $360 million in assets at a $45-million discount. The FDIC also entered into loss/share arrangement with Bank of Essex under which it will share in the losses on certain asset pools. The resolution will cost the Deposit Insurance Fund $126 million.
The Ocala National Bank failure was more straightforward: Winter Park, FL-based CenterState Bank reopened the failed bank’s four branches. CenterState acquired all of Ocala’s $205.2 million in deposits for a 1.7-percent premium, and purchased around $23.5 of the institution’s $223.5 million in assets. The leftovers will be held in the FDIC’s cupboard for future disposal; the agency also will pay brokers $17.2 million for their brokered deposits. All-in-all, the Deposit Insurance Fund will spend an estimated $99.6 million.