On October 30, the FDIC OIG issued a failed bank review of a Philadelphia-based savings bank. Pennsylvania regulators closed the bank on August 21 and appointed the FDIC as receiver (previously covered by InfoBytes here). According to the OIG, the bank had no holding company, operated from a single location, and focused on residential mortgages and small business loans. The report estimates the loss to the Deposit Insurance Fund (DIF) was $5,445,000, approximately 8 percent of the bank’s total assets. The OIG attributed the bank’s failure to a continued decline in earnings caused by high overhead expenses from expanding its mortgage banking division, which resulted in the deterioration of the bank’s capital. The OIG also noted that the bank tried and failed to secure new investors to address its liquidity and capitalization issues.

The OIG did not find any “unusual circumstances” warranting an in-depth review, concluding that: (i) the 8 percent loss to the DIF was smaller than the 20 percent average for failures over the past five years and not significant enough to warrant an in-depth review; (ii) the FDIC’s supervision identified and effectively addressed the issues that led to the bank’s failure or the loss to the DIF; and (iii) there were no other relevant conditions that “significantly contributed” to the bank’s failure or the loss to the DIF.