On May 5, the OCC announced that it had put a Wisconsin-based a federal savings association (Bank) with branches in five states into receivership and appointed the FDIC as receiver. According to the OCC, the decision to close the Bank was made after determining that the Bank: (i) had experienced substantial dissipation of assets or earnings due to unsafe or unsound practices; (ii) was significantly undercapitalized; and (iii) failed to submit a capital restoration plan acceptable to the OCC.
To protect the depositors, the FDIC announced it has entered into a purchase and assumption agreement with a North Carolina-based bank to assume all of the failed Bank’s deposits and to purchase approximately $892 million of the failed Bank’s assets. The remaining assets will be retained by the FDIC for later disposition. The North Carolina bank announced that it will reopen 12 of the failed Bank’s brick-and-mortar locations but will not reopen any of the failed Bank’s 107 branches in retail outlets. Current FDIC estimates are that this failure—the fifth FDIC-insured institution to fail this year—will cost the Deposit Insurance Fund (DIF) $146.4 million. This closely follows the April 28 closure of a New Orleans-based bank, which the FDIC estimates will cost the DIF almost $1 billion.