FDIC Watch

Fourteenth US Bank Fails in 2009

On Friday, February 20, the FDIC announced that the Oregon Department of Consumer and Business Services closed the Silver Falls Bank of Silverton, Oregon. This represents the fourteenth bank in the U. S. to fail this year and the second one in Oregon in slightly over a week: Pinnacle Bank of Beaverton, Oregon failed on February 13.

In a well orchestrated effort, the FDIC announced at the same time that upon being appointed receiver of the failed bank, it entered into a purchase agreement with Citizens Bank of Corvallis, Oregon to take over all of the deposits of the Silver Falls Bank. The quick action protected the customers of the bank so that there would be as little disruption as possible.

With the swift action, the customers of the bank in Silverton immediately became customers of Citizens Bank. All deposits continued to have full FDIC coverage and the affected customers were advised that they would be able to continue to have complete access to their funds via electronic means such as ATM machines and debit cards. They were also advised to continue to use the existing offices of the failed bank until the two banks can be fully integrated.

Customers were also notified that loan customers of the bank should continue to make their payments as usual. Not only the deposits of the Silver Falls bank (which are the bank’s liabilities) but also a substantial portion of the bank’s customer loans (which represent assets of the failed bank) were acquired by Citizens Bank.