Regulators close Suburban Federal Savings Bank
The bank-toppling credit crisis hit home tonight for Crofton-based Suburban Federal, which was closed by federal regulators for being "critically undercapitalized and in unsound condition."
The Office of Thrift Supervision says in its press release that the Bank of Essex of Tappahannock, Va., has acquired the deposits and "Suburban’s branches will open tomorrow as usual as branches of the Bank of Essex."
As you can probably guess, it was a case of mortgages gone bad. From the press release:
Suburban was founded in 1955 and focused on traditional single-family mortgage lending for most of its history. Its problems resulted from the failure of the Board of Directors and managers to oversee an aggressive lending program that began in 2005. The program included reduced documentation, single-family loans and expanded into residential acquisition and development, construction loans and land loans. The program led to a significant increase in problem assets in 2006 and a series of quarterly losses starting in the third quarter of 2007.
It was the first Maryland bank failure since 1992.
