A New Day After Bank's Failure

Name's Different As M&t Acquires Bradford, But Officials Say It's Business As Usual

August 30, 2009|By Brent Jones | Brent Jones,brent.jones@baltsun.com

An advertisement for a low interest rate brought Colette Searol to Bradford Bank in Towson yesterday morning, where instead of hearing a pitch by bank officials detailing the deal, she received a question-and-answer sheet explaining the company's failure.

Searol had planned to open an account but decided against it when she found out the rate she was looking for was no longer offered, in large part because Bradford no longer exists.

"When I saw the parking lot full on a Saturday morning, and there was an employee out there with a FDIC tag, I immediately thought that this was what was going on," she said. "I'm not surprised, but I'm just frustrated because it's messing up my day."

Federal regulators seized Bradford Bank late Friday after the financial institution failed to find a buyer, making it the second bank in Maryland to fall victim to bad loans amid the collapse of the real estate market. M&T Bank, which recently acquired Baltimore's Provident Bank, will assume all of Bradford's deposits and most of its assets in a purchase agreement with the Federal Deposit Insurance Corp.

Bradford's nine branches opened as M&T offices Saturday, although signs were not changed by early afternoon. FDIC officials said it was business as usual, with little disturbance to the bank's customers.

Most customers heading into the main branch on York Road in Towson greeted the news of the bank's failure with indifference. George Porter of Rodgers Forge said he opened an account about a year ago and had kept up with the bank's troubles. Friday's announcement didn't come as a surprise to Porter, and he doesn't anticipate the transition affecting his finances. Porter was attracted to Bradford because it was a community bank but said he will give M&T a chance.

"What concerns me is that the bigger banks are getting bigger and the smaller banks are disappearing," Porter said. "I don't like mega-banks. I don't like their corporate governance, and I will not deal with the bigger banks. That's the only disadvantage I see to all of this."

Lois Fox wasn't so sure there would be no impact. Fox, who lives in Anneslie and is in her 70s, said her parents lost money during the Great Depression in the 1930s, and that sparked her on Saturday to withdraw items from her safe deposit box. She said she'll keep her checking account and has faith her money will be fine, but as for her prized possessions, "I'd just rather be safe than sorry," she said.

The 106-year-old Bradford Bank had $452 million in assets and $383 million in deposits as of June 30, according to regulatory fillings. Bradford lost $3.2 million in the second quarter, on top of a $13.9 million loss in the first quarter.

It became the second Maryland bank failure this year, joining Suburban Federal Savings Bank of Crofton. Suburban's deposits were sold to the Bank of Essex in Tappahannock, Va., in January, the state's first bank failure in 17 years.

FDIC officials said Bradford's deposits will continue to be insured with the agency. Several representatives were at the bank's headquarters yesterday, fielding questions from the public. Bradford customers can continue writing checks or using their ATM cards, and checks will be processed, FDIC officials said.

Ron Zielke of Rodgers Forge said he knew the bank's failure would have little impact on his account, but he wanted to go to the headquarters just to make sure. Zielke has been a Bradford customer since 1975, when he received a loan for a mortgage.

He said he has closely monitored Bradford's loan practices, which regulators have criticized as an aggressive growth strategy poorly planned and executed.

"I'm disappointed that the previous management took unnecessary risks," Zielke said. "Any person could see what was going on in the housing market was unsustainable. Why they continued to participate in it was unreasonable. I could see the big shots trying to swing big dollars, but the local bank that deals with the people? They should have been able to see what the problem was."

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