The Philadelphia Business Journal reports that the American Eagle Savings Bank was closed last Friday by the Office of the Comptroller of the Currency (OCC). The Boothwyn-based bank had had $19.6 million in total assets and $17.7 million in deposits at the end of the third quarter of 2011.
The OCC appointed the Federal Deposit Insurance Corp., the government corporation which guarantees the safety of deposits in its member banks, as receiver. Regulators formed a purchase agreement with Capital Bank of Rockville Maryland for the failed bank’s assets.
When a bank fails because of insolvency or illiquidity, the FDIC pays back deposits and later attempts to recover those payouts by liquidating the “receivership estate” of the failed bank. This is only done, though, if the FDIC does not receive a bid for a purchase and agreement transaction or an insured deposit transfer transaction.
Bank failures usually end up costing the Deposit Insurance Fund since the FDIC, which is the receiver of the failed bank, has to liquidate assets which have significantly decreased in value and pay back the institution’s deposit obligations. Sources said that the FDIC estimates the cost to the Deposit Insurance Fund $3.2 million.
On Saturday, American Eagles sole branch reopened as Capital Bank. According to the FDIC, American Eagle customers should continue to use their existing branch until receiving notice from Capital Bank that it has completed systems changes to allow other company locations to process their accounts.
American Eagle is reportedly the fifth bank failure in the region since the recession began.
Source: Philadelphia Business Journal, “Capital Bank buys failed Phila.-area bank,” Jeff Blumenthal, January 23, 2012.
