In the failure of a small Pennsylvania bank, the Federal Deposit Insurance Corp. took an unusual step that it normally reserves for the largest institutions.
On Thursday, the Pennsylvania Department of Banking closed Public Savings Bank and named the FDIC as receiver.
The move was highly irregular given that, in nearly every federally insured bank failure, the FDIC waits until Friday evening to send its agents in to seize a bank.
Among the few exceptions was on Thursday, Sept. 25, 2008.
That was when the Office of Thrift Supervision closed down Washington Mutual Bank and handed it over to the FDIC as receiver. The FDIC worked out a deal to sell the $307 billion bank to JPMorgan Chase & Co.
But Public Savings was a tiny bank.
The Huntingdon Valley, Pa., institution had just $46 million (or $0.05 billion) in deposits and $47 million in assets.
So why was the tiny bank closed ahead of the normally Friday ritual?
Turns out that the bank was owned by and served an Orthodox Jewish community, LaJuan Williams-Young, a spokeswoman for the FDIC, explained.
“Sundown on Fridays begins the Sabath and, as such, there would be no employees from the bank available on Friday evening to assist with the transition over to the new institution,” Williams-Young said in a written statement.
Public Savings was founded in 1984. At the end of March, just 29 people were on staff.
In May, the FDIC issued a cease-and-desist order against Public Savings.
Capital Bank, N.A., picked up the failed bank’s deposits and assets including $12 million in home loans, $17 million in commercial mortgages and $1 million in construction-and-land-development assets.
Public Savings’ failure, the 65th FDIC-insured failure this year, is expected to deplete the Deposit Insurance Fund by $11 million.
Mortgage Daily has tracked 92 mortgage-related businesses that have closed or failed so far during 2011.
