The FDIC announced the failure of two banks this week; both MagnetBank in Utah and Suburban Federal Savings Bank in Maryland were closed. 

MagnetBank, a small bank based out of Salt Lake City, was closed today by the Utah Department of Financial Institutions.

As of Dec. 2, 2008, MagnetBank held $292.9 million in total assets and $282.8 million in total deposits. According to the Federal Deposit Insurance Corporation [FDIC], the banking operations of the bank had been marketed extensively, but the agency was unable to find another banking institution to take it over.

FDIC was named receiver for the failed bank and approved payout to insured depositors, ensuring that checks would be mailed on Monday morning. Brokered deposits will be wired once FDIC determines no clients exceeded insurance limits. At this point, FDIC does not believe the bank held any uninsured funds.

Suburban Federal Savings Bank, based in Crofton, Md., was closed by the Office of Thrift Supervision.  FDIC was named receiver and a purchase and assumption agreement with take place with Bank of Essex, Tappahannock, Va. 

According to a press release from the FDIC, Bank of Essex and FDIC will share the losses on asset pools in the agreement, which should “maximize returns on the assets by keeping them in the private sector.”  FDIC noted that this agreement will likely lessen disruptions for loan customers.

Bank of Essex will take over the deposits of Suburban Federal, reopening the failed bank’s seven locations as branches of Bank of Essex. 

FDIC insurance will continue to protect customers of Suburban Federal Savings’ deposits, and those customers should continue using their local branches until they are fully integrated with Bank of Essex. 

Suburban Federal held $360 million in total assets and $302 million in total deposits as of September 30, 2008, according to FDIC.  The Bank of Essex will purchase approximately $348 million in assets at a discount of $45 million, after assuming all of Suburban Federal’s deposits.  FDIC will hold onto the remaining assets until they can be sold at a later date.

The cost to the Deposit Insurance Fund will be $126 million, according to FDIC estimates, and the acquisition by Bank of Essex was the “least costly resolution.”