Customers with deposits exceeding federal deposit insurance coverage at a Chicago savings bank closed Friday will begin finding out Monday if their savings are protected by the program.
The Office of the Comptroller of the Currency (OCC) announced Friday afternoon that it had appointed the Federal Deposit Insurance Corp. (FDIC) the receiver for Washington Federal Bank for Savings of Chicago. The OCC said it took the action after finding that “the bank had experienced substantial dissipation of assets due to unsafe or unsound practices, and that the bank’s assets were less than its obligations to its creditors and others.”
The failure of Washington Federal is estimated to cost the Deposit Insurance Fund $60.5 million, the FDIC said. It’s the eighth bank to fail this year (the third in Illinois).
The FDIC also announced Friday that the “insured deposits” of the $166 million-in-assets savings bank would be acquired by Royal Savings Bank (also of Chicago), under a purchase and assumption agreement for the insured savings. Savings at FDIC-insured banks and savings institutions are insured up to $250,000.
In a release, the FDIC said that Washington Federal held total deposits of $144 million as of Sept. 30, of which about $11.6 million exceeded FDIC insurance limits. “This estimate is likely to change once the FDIC obtains additional information from these customers,” FDIC said.
The deposit insurance agency noted that, beginning Monday, customers with more than $250,000 at the bank should visit the FDIC’s webpage “Is My Account Fully Insured?” at https://closedbanks.fdic.gov/drrip/AFI/Search to determine their insurance coverage. The agency also said customers with accounts in excess of $250,000 should contact the FDIC toll-free at 1-877-367-2718 to set up an appointment to discuss their deposits.
Under the P&A agreement, Royal Savings Bank assumes the insured deposits for a 1.26% premium. It will also purchase approximately $23.7 million of the failed bank’s assets. The FDIC said it will retain the remaining assets for later disposition.