New South Federal Savings Bank is the Latest U.S. Failed Bank

Just when we thought the economic recession was coming to an end, another U.S. bank has failed. According to the Federal Deposit Insurance Corporation (FDIC), on December 18, 2009, New South Federal Savings Bank, based in Irondale, AL. was closed by the Office of Thrift Supervision (OTS), and the FDIC was named receiver. New South Federal Savings Bank is the 137th FDIC-insured institution to fail in the nation this year, and the third in Alabama. The FDIC did not disclose any specific reasons around the bank failure.

As of September 30, 2009, New South Federal Savings Bank had approximately $1.5 billion in total assets and $1.2 billion in total deposits.

All customer deposit accounts have been transferred to Beal Bank, based in Plano, TX and are immediately available to customers. On Monday, December 21, 2009, the former New South Federal Savings Bank locations reopened as branches of Beal Bank.

According to the bank's website, Beal Bank was founded in 1988 in Plano, and has a network of branches in major metropolitan areas across the U.S. including Dallas, Houston, Atlanta, Miami, Philadelphia, Chicago, and New York. Prior to the acquisition of New South Federal Savings Bank, Beal Bank had total capital of approximately $587 million and total assets of approximately $2.88 million.

To protect the depositors, the FDIC entered into a purchase and assumption agreement with Beal Bank to assume all of the deposits of New South Federal Savings Bank. Depositors of New South Federal Savings Bank automatically became depositors of Beal Bank.

Customer deposits 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. Customers should also continue to use their existing branch until they receive notice from Beal Bank that it has completed systems changes, which will allow other Beal Bank branches to process their accounts as well.

The FDIC and Beal Bank entered into a loss-share transaction on $1.2 billion of New South Federal Savings Bank's assets. Beal Bank will share in the losses on the asset pools covered under the loss-share agreement. Under loss sharing, the FDIC agrees to absorb a portion of the loss on a specified pool of assets in order to maximize asset recoveries and minimize FDIC losses. Loss sharing reduces the immediate cash needs of the FDIC, is operationally simpler and more seamless to failed bank customers. This process also moves assets quickly into the private sector.

Customers who have questions about this transaction can call the FDIC directly toll-free at 1-800-423-6395.

For a complete list of failed U.S. banks, take a look at the "Failed Banks List" located on the FDIC's website at http://www.fdic.gov/bank/individual/failed/banklist.html.

Sources: www.FDIC.gov

www.bealbank.com