COLUMBIA — All former Premier Bank locations reopened Saturday as branches of Columbia-based Providence Bank.
Premier Bank's board of directors voluntarily turned over control of the bank to the Missouri Division of Finance on Friday after failing to sell the bank or gain additional capital. The Federal Deposit Insurance Corp. then immediately took control of the Jefferson City-based bank's assets, according to a Providence Bank news release.
Providence Bank announced the same day that it had entered into a purchase and assumption agreement with the FDIC, the release said. The arrangement will allow Providence to assume all deposits and purchase assets of Premier.
The FDIC and Providence Bank also entered into a loss-share transaction on $629.6 million of Premier Bank’s assets. The transaction is expected to maximize returns on the assets covered by keeping them in the private sector and minimize disruptions for loan customers, according to the release.
Assets of Premier Bank totaled $989 million as of Sept. 30, according to a news release by the Missouri Division of Finance. The FDIC said Providence Bank agreed to purchase approximately $657.9 million of the failed bank's assets in addition to assuming all of the bank’s deposits. The federal corporation will hold on to the remaining $331.1 million.
Premier Bank lost more than $31 million in 2008, according to a previous Missourian report. Premier Bank’s holding company, Premier Bancshares Inc., was placed under the supervision of the Federal Reserve in March 2009.
"The demise of this bank is the result of aggressive lending decisions made by management,” Richard J. Weaver, commissioner of the Division of Finance said in a written statement. “Many of the loans were in commercial real estate and development projects which proved unsuccessful. These loans became uncollectible. Losses are more than the bank can support, and management acknowledges that failure of the bank is inevitable.”
The FDIC estimated that the cost to the Deposit Insurance Fund, the fund that makes sure bank customers don't lose their entire accounts when banks go under, will be $406.9 million, according to the release.
“Compared to other alternatives, Providence Bank's acquisition was the least costly resolution for the FDIC's Deposit Insurance Fund,” the release said. Premier Bank is the 132nd FDIC-insured institution to fail in the nation this year and the sixth in Missouri.
Providence Bank operates branches in Columbia, Elsberry and Winfield but will now control Premier’s nine former locations in Jefferson City, Chesterfield, Lake St. Louis, Osage Beach, St. Charles and St. Peters and one branch in Grapevine, Texas.
All former Premier Bank customers will be able to conduct banking business as usual, according to the Providence Bank news release.
“Former Premier Bank customers can access their money by writing checks, using ATMs, debit cards or the Internet,” the release stated. “Checks drawn on the former Premier Bank will continue to be accepted.”
“As a community bank strongly focused on financial strength, relationships and service, we look forward to getting to know our new customers from Premier Bank,” Brett Burri, president and chief executive officer of Providence Bank, said in the release. “We feel that strong banking makes for strong communities, and we look forward to the opportunity to support the customers and communities of Premier Bank going forward.”