Knoxville's BankEast fails; closed by state banking officials

Knoxville's BankEast fails; closed by state banking officials

KNOXVILLE (WATE) - State banking officials closed BankEast in Knoxville late Friday after they determined the bank could not meet its obligations to customers.

A Cincinnati, Ohio bank has purchased the assets and assumed all deposits of the cash-strapped bank, officials said.

BankEast was closed around 6:00 p.m. by the Tennessee Department of Financial Institutions. The Federal Deposit Insurance Corporation was named as receiver.

To protect the depositors, the FDIC entered into a purchase and assumption agreement with U.S. Bank National Association in Cincinnati, Ohio, to assume BankEast's deposits.

Officials said the 10 branches of BankEast will reopen on Monday as branches of U.S. Bank National Association.

Depositors of BankEast will automatically become depositors of U.S. Bank National Association, the FDIC says.

According to an FDIC press release, deposits will continue to be insured by the FDIC, meaning there's no need for customers to change their banking relationship in order to retain their deposit insurance coverage, up to applicable limits.

Customers of BankEast should keep using their existing branch until they receive notice from the U.S. Bank National Association that changes have been completed so that other U.S. Bank National Association branches can process accounts.

On Friday night and through the weekend, depositors of BankEast 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.

As of September 30, 2011, BankEast had approximately $272.6 million in total assets and $268.8 million in total deposits.

In addition to assuming all the deposits of the failed bank, U.S. Bank National Association agreed to purchase essentially all of the assets, the press release says.

Customers with questions about Friday's transaction should call the FDIC toll-free at 1-800-517-1839. The phone number will be in operation Friday until 9:00 p.m.

The FDIC number will also be in service these days:

You can also can visit the FDIC's website at www.fdic.gov/bank/individual/failed/bankeast.html for more information.

The FDIC estimates the cost to the Deposit Insurance Fund (DIF) will be $75.6 million.

Compared to other alternatives, U.S. Bank National Association's acquisition was the least costly resolution for the FDIC's DIF.

BankEast is the seventh FDIC-insured institution to fail in the U.S. this year, and the second in Tennessee.

Tennessee Commerce Bank in Franklin closed Friday.