Topeka bank closed

Topeka Capital-Journal, The, Aug 23, 2008 by Michael Hooper

By Michael Hooper

THE CAPITAL-JOURNAL

Kansas Bank Commissioner J. Thomas Thull on Friday closed Topeka- based Columbian Bank & Trust Co., which had been struggling with more than $92 million in bad loans.

The Federal Deposit Insurance Corp. was named receiver. Citizens Bank and Trust, of Chillicothe, Mo., will assume the insured deposits of Columbian Bank & Trust, said a statement from the FDIC.

The nine branches of Columbian Bank & Trust will reopen Monday as branches of Citizens Bank and Trust. Depositors of the failed bank will automatically become depositors of Citizens Bank and Trust. Deposits will continue to be insured by the FDIC.

This weekend, customers of Columbian Bank & Trust can access their money by writing checks or using ATM or debit cards, the FDIC said. Checks drawn on the bank will continue to be processed. Loan customers should continue making their payments as usual.

Thull said the state stepped in at the close of business at 5 p.m. Friday.

"This one happened so quickly," the bank commissioner said. "New signs will be going up Saturday."

The bank has five locations in Topeka, with its main office at 701 S. Kansas Ave., plus three locations in Johnson County and one in Lee's Summit, Mo.

On June 30, the bank reported $92 million in nonperforming loans, many of them in real estate, and $43 million in capital.

Carl McCaffree, whose family has owned the bank since 1974, couldn't be reached for comment.

As of June 30, Columbian Bank & Trust had $752 million in assets and total deposits of $622 million, of which there were approximately $46 million in uninsured deposits held in approximately 610 accounts that potentially exceeded the $100,000 insurance limit, the FDIC said. This amount is an estimate that is likely to change once the FDIC obtains additional information, the FDIC said.

Columbian Bank & Trust also had approximately $268 million in brokered deposits that aren't part of Friday's transaction. The FDIC will pay the brokers directly for the amount of their insured funds.

Customers with accounts in excess of $100,000 should contact the FDIC at (800) 523-8209 to set up an appointment to discuss their deposits. The phone number will be operational today from 9 a.m. to 6 p.m., Sunday from 11 a.m. to 5 p.m. and thereafter from 8 a.m. to 8 p.m.

Citizens Bank and Trust agreed to assume the insured deposits for a 1.125 percent premium. It also will purchase $85.5 million of the failed bank's assets. The assets are comprised mainly of cash, cash equivalents and securities. The FDIC will retain the remaining assets for later disposition.

The cost to the FDIC's Deposit Insurance Fund is estimated to be $60 million.

Columbian Bank & Trust is the first bank to fail in Kansas since Midland Bank of Kansas, Mission, on April 2, 1993. This year, a total of nine FDIC-insured institutions have been closed.

Customers who would like more information on Friday's transaction can visit the FDIC's Web site at http://www.fdic.gov/bank/ individual/failed/columbian.html.

Beginning Monday, depositors of Columbian Bank & Trust with more than $100,000 at the bank may visit the FDIC's Web page "Is My Account Fully Insured?" at http://www2.fdic.gov/dip/Index.asp to determine their insurance coverage.

The Associated Press said concern has been growing over the solvency of some banks amid the housing slump and the steep slide in the mortgage market. The pressures of tighter credit, tumbling home prices and rising foreclosures have been battering many banks, large and small, across the nation.

The FDIC has been beefing up its staff of examiners to handle the anticipated spike in bank failures this year. The largest bank failure by far this year has been that of savings and loan IndyMac Bank, which was seized by regulators on July 11 with about $32 billion in assets and deposits of $19 billion.

FDIC chairwoman Sheila Bair, a native Kansan, said recently she expects turbulence in the banking industry to continue well into next year and more banks to appear on the agency's internal list of troubled institutions.

Of the 8,500 banks in the country, 90 were considered to be in trouble in the first quarter. The FDIC doesn't disclose the banks' names.

On average, 13 percent of banks that make the list fail, and most are nursed back to health or acquired by stronger institutions, Bair said.

The Associated Press contributed to this report.

Michael Hooper can be reached

at (785) 295-1293

or michael.hooper@cjonline.com.