Sunday, October 31, 2010

Depositors at closed bank lose $1.8 million

Depositors stand to lose $1.8 million in uninsured deposits after the closure of First Arizona Savings by banking regulators Friday. Checks have been mailed out to insured depositors, but the closure creates logistical problems for the bank's borrowers, direct depositors, safe-deposit holders and others.

The Office of Thrift Supervision shut down the Scottsdale-based financial institution and appointed the Federal Deposit Insurance Corp. as receiver, citing a "critically undercapitalized" position.

The institution had nearly $199 million in total deposits, but the FDIC reiterated that $1.8 million of those exceeded the general insurance limit of $250,000 per account and were uninsured.

Banking regulators closed six other institutions last week, raising the year-to-date total to 139. First Arizona Savings marked the sixth case this year in which the FDIC wasn't able to find another bank to assume deposits for an acceptable price. In two cases, bank regulators started a new institution to take over.

The bank's branches won't re-open and all deposit accounts were closed. Still, officials said the transition went off without significant problems.

"I think it's been pretty smooth," said LaJuan Williams-Young, a spokeswoman for the FDIC in Washington, D.C. "There was a little anxiety initially, but it has calmed."

Adela Coronado, an FDIC ombudswoman who is helping to handle the First Arizona Savings case, said checks have been mailed out to insured depositors. Customers will receive an individual check for each account, along with a final statement, likely by the end of the week, she said.

The closure also affects customers with loans and transactional accounts. Checks drawn on First Arizona Savings that hadn't cleared as of Friday will be returned with a message indicating the bank has closed.

Direct deposits payable by the U.S. Treasury to First Arizona Savings customers will be redirected to Mutual of Omaha Bank. Customers will need to make other arrangements for other direct-deposit situations.

The contents of safe-deposit boxes at First Arizona Savings need to be removed by Nov. 22.

The FDIC now owns loans held by First Arizona Savings and directed customers to continue making payments as before. The agency also said it has temporarily suspended foreclosures started by First Arizona Savings. The FDIC didn't reveal how many foreclosures are in the pipeline.

The Office of Thrift Supervision in September ordered the bank to shore up its capital position and make other changes.

The company began operations in 1988 as First Arizona Savings and Loan Association. At last count, it had 90 employees and assets of roughly $272 million, with six branches in addition to its home office. The branches were in Scottsdale, Glendale, Bullhead City, Fort Mohave, Kingman and Lake Havasu City.

Customers are asked to contact the FDIC at 1-800-830-4698 or

by Russ Wiles The Arizona Republic Oct. 26, 2010 12:00 AM

Depositors at closed bank lose $1.8 million

Real Estate News

HootSuite - Social Media Dashboard