From staff and wire reports
WASHINGTON: Regulators on Friday shut down Ohio's AmTrust Bank, the fourth-largest bank to fail this year. They also closed five others, bringing to 130 the number of U.S. banks to be brought down so far in 2009 by recession and mountains of bad debt.
The Federal Deposit Insurance Corp. took over AmTrust Bank, based in Cleveland, with about $12 billion in assets and $8 billion in deposits. Its failure is expected to cost the federal deposit insurance fund an estimated $2 billion.
In addition to its branches in Ohio, AmTrust formerly Ohio Savings had branches in Florida and the Phoenix area.
The 120-year-old bank employs 1,736, including about 1,400 in Northeast Ohio.
New York Community Bank, based in Westbury, N.Y., agreed to assume the deposits of AmTrust Bank and about $9 billion of its assets. The FDIC will retain the rest for eventual sale. AmTrust's 66 branches will reopen starting today as offices of New York Community Bank, the FDIC said.
In addition, the FDIC and New York Community Bank agreed to share losses on about $6 billion of the failed bank's loans and other assets.
Also seized Friday by the FDIC were Buckhead Community Bank, based in Atlanta; First Security National Bank, based in Norcross, Ga.; Tattnall Bank, based in Reidsville, Ga.; Benchmark Bank, based in Aurora, Ill.; and Greater Atlantic Bank, based in Reston, Va.
The three shutdowns in Georgia brought to 24 the number of bank failures in that state so far this year.
A trail of troubles
Earlier this year, AmTrust sold five of its Columbus-area branches.
On March 13, the bank closed its downtown Akron branch in the recognizable circular building at East Market Street and Broadway. Officials said the bank believed its four other branches in the Akron area supportrf its clients.
That followed undisclosed layoffs by the bank in December of 2008.
Earlier this week, the bank's privately held parent company, AmTrust Financial Corp., said it had filed voluntary petitions for Chapter 11 reorganization in Cleveland.
The bankruptcy filing did not apply to the corporation's banking unit.
Q&A for bank customers
Q: What happens to my account with AmTrust Bank?
A: Any accounts you have through AmTrust Bank checking, savings, money market, CDs and retirement funds transfer to New York Community Bank. AmTrust customers should continue to use their branches until New York Community Bank can fully integrate the deposit records.
Q: Can I still withdraw cash at the ATM during the transition?
A: Yes. ATM/debit cards will continue to work.
Q: Will the transition interrupt direct deposits and automatic bill payments?
A: No. Direct deposits, including Social Security checks, will continue as normal. Electronic bill paying will work as it has in the past.
Q: Will I continue to earn interest at the same rate? Will I be charged an early withdrawal penalty?
A: Interest on all AmTrust deposits accrued through Friday will be paid at your same rate. New York Community Bank will review rates and notify you if any will change. Your interest rate may be reduced.
You may withdraw funds from any transferred account without an early withdrawal penalty until you enter into a new deposit agreement with your new bank. Entering into a new deposit agreement can be done by either renewing your CD or making a deposit to or a withdrawal from your account.
Q: What about my loan or mortgage with AmTrust?
A: All mortgages and loans have been assumed by New York Community Bank. Your payment amount and due date are the same. If you are having your payment deducted from your account, it will continue as it has in the past. You should continue to make your checks payable to AmTrust and send your payments to the same address.
Q: What happens if I had a loan in process that had not closed or a line of credit not fully funded?
A: You should contact your loan officer. All prior contacts remain the same.
Q: What about checks that I have written on my account with AmTrust Bank?
A: Your checks will clear up to the available balance in your account. You can continue to use your checks.