This is the first federal seizure of a Maryland depository institution since 1992. Bank of Essex on Virginia's Northern Neck Middle Peninsula is taking over Suburban Federal of Crofton.

The Suburban branches open as Essex branches tomorrow. Bank of Essex gets $348 million in Suburban Federal assets for $303 million. The FDIC takes over another $12 million in (presumably ultratoxic) loans. Loss to the deposit insurance fund: $126 million, which is quite a feat for a thrift this size.

Suburban looks like a typical case of mortgage madness. This is a $350 million bank. 60 employees. As of September it had made $304 million in mortgage loans! That's an undiversified recipe for exactly what just happened.

Interesting that the FDIC had to go so far afield to find somebody to take these guys over. Tappahannock, Va., is two tidal estuaries -- Potomac, Rappahannock -- away.

There were 660 accounts with deposits of more than $100,000 at Suburban as of September, but all deposits are still insured with the Essex takeover. (The new deposit-insurance limit is $250,000 anyway.)

Essex is shouldering some risk for the Suburban portfolio but is being backstopped by the FDIC, which wants to take on as few troubled assets as possible.

Depositors of Suburban Federal will automatically become depositors of Bank of Essex. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. 

Over the weekend, depositors of Suburban Federal can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.