It's Friday, and as you all know that is the day the FDIC usually shuts down banks and today was another one. The Feds closed Texas-based community bank Franklin Bank, S.S.B., Houston, Texas, today. Franklin was founded in 2001 to create a Texas-based community bank concentrated outside the major metropolitan areas, according to its previous website. It was bought by Franklin Bank S.S.B., in Austin, Texas, in April 2002.
Last Sunday, Franklin said it had received proposals from parties to strengthen the capital position of its subsidiary Franklin Bank SSB. "Consummation of anyone of proposals would restore the Bank's capital category, for regulatory purposes, to the well capitalized category," the bank said.
Franklin was closed today by the Texas Department of Savings and Mortgage Lending. Subsequently, the FDIC was named Receiver. No advance notice was given to the public.
Franklin Bank's 46 offices will reopen as branches of Prosperity Bank under their normal hours, including those with Saturday hours.
As of September 30, Franklin Bank had total assets of $5.1 billion and total deposits of $3.7 billion, the FDIC said. Prosperity Bank agreed to assume all the deposits, including brokered deposits, for a premium of 1.7 percent. In addition to assuming all of the failed bank's deposits, Prosperity will purchase approximately $850 million in assets. The FDIC will retain the remaining assets for later disposition.
The FDIC estimates that the cost of today's transaction to its Deposit Insurance Fund will be between $1.4 billion and $1.6 billion.
Franklin's stock (FBTX) closed today at $0.26, down 33.33% from yesterday. Overall the return for FBTX is -93.94% YTD, -96.01% 1 Year, and -98.47% for 3 year.
Franklin Bank is the eighteenth bank to fail in the nation this year, and the first in Texas since Bank of Sierra Blanca, Sierra Blanca, Texas, on January 18, 2008. The 18 bank failures so far this year compare with three for all of 2007 and are more than in the previous five years combined.
In an interesting side note, Lewis S. Ranieri who founded the Franklin Bank Corporation, spent the last few years warning anyone who would listen that the housing market was about to collapse. Obviously, he didn't listen to his own words.
The Mortgage Lender "Implode-O-Meter" has an article listing a dozen outstanding law suits against Franklin Bank in June.
And back in July, 2008 Franklin Bank Corp received a notice from the NASDAQ stock market stating it no longer met listing requirements because its share prices had been below the required minimum price of $1 for 30 consecutive days.