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Bank of Essex acquires Suburban Federal Savings Bank

The FDIC and Bank of Essex entered into a loss-share transaction

The Federal Deposit Insurance, or FDIC, has announced that the Suburban Federal Savings Bank in Crofton, Maryland was closed by the Office of Thrift Supervision and the FDIC was named receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Bank of Essex, Tappahannock, Virginia, to assume all of the deposits of Suburban Federal.

According to the FDIC, the failed bank’s seven offices will reopen as branches of Bank of Essex. Depositors of Suburban Federal will automatically become depositors of Bank of Essex. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage, the FDIC added.

In addition to assuming all of the failed bank’s deposits, Bank of Essex agreed to purchase approximately $348 million in assets at a discount of $45 million. The FDIC will retain the remaining assets for later disposition.

The FDIC and Bank of Essex entered into a loss-share transaction. Bank of Essex will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is expected to maximise returns on the assets covered by keeping them in the private sector.