The Board of Directors of the Federal Deposit Insurance
Corporation has approved the assumption of all the deposits of
Commercial Bank and Trust Company, Lowell, Massachusetts, by
Medford Savings Bank, Medford, Massachusetts. Commercial Bank,
with total assets of $32.9 million, was closed today by the
Massachusetts Commissioner of Banks, and the FDIC was named
receiver.
The failed bank's four offices will reopen as branches of
Medford Savings, and its depositors automatically will become
depositors of the assuming bank. The former bank's main office,
which did not have Saturday hours, will reopen on Monday, May 9.
Commercial Bank's other offices will reopen Saturday, May 7.
Medford Savings will assume about $31.6 million in about 6,800
deposit accounts, and will pay a premium of $1,225,000 for the
right to receive the failed bank's deposits.
Medford Savings also will purchase $10.i million of the failed
bank's assets, and the FDIC will retain assets of Commercial Bank
with a book value of $21.2 million. To facilitate the transaction,
the FDIC will advance about $18.5 million to the assuming bank.
At the time of the closing, the FDIC entered into an agreement with
Stoneham Savings Bank, Stoneham, Massachusetts, to purchase $1.6
million in home equity and other consumer loans from Commercial
Bank for a $95,000 premium.
The Board of Directors approved the deposit assumption under
its authority to do so whenever it determines that such a
transaction will reduce the potential loss to the FDIC. The FDIC
notes that its claim on recoveries from the sale of the failed
bank's assets will have priority over non-depositor creditors of
the failed bank.
