Dedicated to Deposits: Deals, Data, and Discussion

5th Bank Failure of 2009: Suburban Federal Savings Bank in Maryland

POSTED ON BY

This is bank closure #2 for today. Suburban Federal Savings Bank was closed by the Office of Thrift Supervision (OTS) and the FDIC was named receiver. Here's the FDIC's press release link, and here's a summary of the closure:
  • Closed Bank: Suburban Federal Savings Bank
  • Location: Crofton, MD
  • Size: 7 branches, $360 million assets, $302 million deposits
  • Possible Uninsured Deposits: ALL deposits Transfered
  • Acquiring Bank: Bank of Essex, VA
  • Cost to Deposit Insurance Fund: $126 million (estimated)
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com
The OTS has its own press release on this closure with an explanation on why it was closed:
The OTS determined that Suburban was critically undercapitalized and in unsound condition.

It's interesting to note in the press release of how long it took the OTS to finally close the bank. The process started in February 2007 when it found that problem assets had increased dramatically.

The FDIC Q&A Guide has the complete details. This was an All-Deposit Transfer, so even uninsured deposits were assumed by the Bank of Essex. This also includes brokered deposits.

The only downside for depositors is that Bank of Essex has not decided on whether it will honor CD rates to maturity. Here's the Q&A on this issue:
Bank of Essex will be reviewing rates and will notify you.

You may withdraw funds from any transferred account without an early withdrawal penalty until you enter into a new deposit agreement with your new bank. Entering into a new deposit agreement can be done by either renewing your CD or making a deposit to, or a withdrawal from, your account.

I did have one post on this bank in November 2007 when it was offering a 5.30% 12-month CD.

Bankrate and BauerFinancial were on target with the ratings for safety and soundness. Both gave the bank their lowest ratings.

References:
Thanks to the readers who emailed me news of this closure.

Related Posts

Comments
2 comments.
Comment #1 by Anonymous posted on
Anonymous
The bank's problems were reported in a local paper. So its closure was not unexpected since a buyer could not be found. This bank also dabbled in the no documentation loan phenomena of recent years. It seems that the very low interest rates back from 2003 spawned all of these exotic investment vehicles. Now interest rates are very low again, so what new exotic investment vehicle are the investment bankers going to come with now? They have to keep inventing new things, otherwise, they won't be able to collect those multimillion dollar bonuses every year.

1
Comment #2 by Anonymous posted on
Anonymous
The bank is offering a 13 month CD at 3.03% APY which isn't too bad. I will go to the HQ office and open an account there since they were taken over by the other bank earlier last month.

1