The Board of Directors of the Federal Deposit
Insurance Corporation approved the assumption of the
insured deposits of The First National Bank of the
Panhandle, Panhandle, Texas, by Sun Bank, Sunray,
Texas, and The Plains National Bank of West Texas,
First National was closed today by the Comptroller
of the Currency (OCC), and the FDIC was named receiver.
First National, with assets of $78.7 million and total
deposits of $76.1 million as of February 1996, received
a national bank charter from the OCC in May 1927.
The OCC used its authority under the FDIC
Improvement Act of 1991 to close the bank when it found
that First National was critically undercapitalized,
having less than two percent tangible equity capital.
The bank's financial troubles were due primarily to
alleged fraudulent lending activities committed by a
former senior officer. Insufficient application of the
bank's credit controls and procedures allowed these
practices to remain undetected. As a result, First
National incurred huge loan losses that depleted
substantially all of its capital.
In light of these events, the OCC determined that
closing the bank and appointing FDIC receiver was
necessary to protect the interests of the bank's
First National's former main office in Panhandle
will reopen on Monday, June 17, as Sun Bank. Its
Amarillo branch will reopen on Monday, June 17, as The
Plains National Bank of West Texas. Drive-up windows
at both locations, however, will be open Saturday,
June 15. Deposit customers of the failed bank
automatically will become depositors of Sun Bank or
Plains National, depending on where they opened their
Sun Bank will assume about $40 million in 4,900
deposit accounts and will pay the FDIC a premium of
$1.7 million for the right to receive the failed bank's
Panhandle insured deposits and to purchase $10.7
million in assets.
Plains National will assume about $36 million in
2,500 deposit accounts and will pay the FDIC a premium
of $1.8 million for the right to receive the failed
bank's Amarillo insured deposits and to purchase $12.6
million of the failed bank's assets.
At the time First National was closed, about
$752,000 in 102 accounts exceeded the federal insurance
limit of $100,000 and will not be assumed by either
bank. Depositors of the failed bank who believe they
may have uninsured deposits should call to make an
appointment with an FDIC Claims Agent at the office
where they opened their account. Uninsured depositors
at the Panhandle office should call (806) 537-3351
while uninsured depositors at the Amarillo branch
should call (806) 355-9927.
In separate agreements with two other area banks,
the FDIC will sell an additional $23.4 million of the
failed bank's assets. Boatmen's First National Bank of
Amarillo will purchase $10.2 million of the failed
bank's assets at a premium of $134,000, and First
American Bank, SSB, Bryan, Texas, will purchase $13.2
million in assets at a premium of $643,000.
The FDIC will retain approximately $32.0 million
of the failed bank's assets. Because First National
held deposits insured by both the Bank Insurance Fund
(BIF) and the Savings Association Insurance Fund
(SAIF), the estimated $12.4 million cost of this
transaction will be allocated between the two FDIC-
administered funds, with approximately $11.9 million
attributed to BIF and $500,000 to the SAIF.
The FDIC 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 insurance funds. Under federal law,
uninsured depositors and creditors holding deposit claims
will receive priority in payment from the sale of assets of
the failed bank over creditors holding non-deposit
The First National Bank of the Panhandle is the
third FDIC-insured bank failure in the U.S. this year
and the second in Texas.
The OCC charters, regulates and examines approximately 2,800
national banks and 70 federal branches and agencies of foreign
banks in the U.S., accounting for more than half the nation's
banking assets. Its mission is to ensure the safety and soundness
of the national banking system.
Congress created the Federal Deposit Insurance Corporation in
1933 to restore public confidence in the nation's banking system.
The FDIC insures deposits at the nation's 12,000 banks and
savings associations and it promotes the safety and soundness
of these institutions by identifying, monitoring and addressing
risks to which they are exposed.
FDIC press releases and other documents are available on the
Internet via the World Wide Web at www.fdic.gov or through
Gopher at gopher.fdic.gov. They may also be obtained through
the FDIC's Public Information Center, 801 17th Street, NW,
Room 100, Washington, DC, (202/415-6940).