K Bank customers deal with failure

M&T Bank takeover of shuttered rival appears to go smoothly

  • FDIC officials outside K Bank just shortly after the bank was closed by regulators. All K Bank branches will reopen Saturday as M&T Bank.
FDIC officials outside K Bank just shortly after the bank was… (Baltimore Sun photo by Gus…)
November 06, 2010|By Paul West, The Baltimore Sun

It was business as anything but usual Saturday morning at Baltimore-area branches of K Bank, the latest Maryland financial institution to fail this year.

Hours earlier, K Bank had been shuttered by regulators, then taken over by M&T Bank. The new owners deployed its employees to the seven branches to reassure customers they had nothing to worry about.

Not all were convinced. Several of the customers waiting to be helped at the branch on Baltimore National Pike in Ellicott City planned to close their accounts.

Bob Wissmann decided to cash in a certificate of deposit after reading about K Bank's failure on the front page of The Baltimore Sun.

Wissmann said he became a customer about two and a half years ago, when K Bank was offering higher returns on CDs than competing institutions.

The Ellicott City man was able to pull his money out without an early withdrawal penalty because the bank had been taken over. An information sheet on a table in the bank lobby advised customers that M&T would be reviewing the interest rates that K Bank had been offering and could decide to lower them.

"They were very cooperative," said Wissmann, a business manager for a Catholic church. He and his wife had checked M&T's financial strength and decided to move their money to a bank with a higher safety rating, he said.

At the K Bank on the corner of Old Court and Liberty roads in Randallstown, the scene was similar. A steady trickle of customers filtered in, either to remove their money or simply seek reassurance about M&T, which agreed Friday to assume all K Bank deposits and acquired most of its assets.

Notices taped to doors and ATM machines informed customers that state regulators had closed K Bank, the 13th-largest Maryland-based bank, and that former K Bank branches would close for good Friday, Nov. 12.

One longtime customer said she heard about the bank failure on the evening news and decided to come by for an explanation.

"I was scared," said Evelyn, who declined to give her last name. She said her husband is in an assisted-living center and she needed to know that their money was safe. After talking with a branch employee that she's known for years, she said, she was reassured.

The Liberty Road resident also said it wasn't her first experience with a troubled local financial institution.

"I remember about that bank," she said, gesturing toward a three-story brick building, directly across the street, that once housed Old Court Savings & Loan. Twenty-five years ago, panicked depositors descended on the thrift's offices, hoping to pull out their money before accounts were frozen.

"We waited in a long, long line," Evelyn recalled. "We got our money out, but not the interest." Old Court's president, Jeffrey Levitt, went to prison for stealing and misappropriating $14.6 million from the S&L's depositors in what became the largest white-collar crime in Maryland history.

The bursting of a real estate bubble, rather than outright theft, was blamed for K Bank's demise, one of 141 bank closures nationwide so far this year. That's the highest number of shuttered financial institutions in the United States since the height of the S&L crisis in the early 1990s.

A spokesman said the first day of the former K Bank's management by M&T Bank had "gone quite smoothly." Phillip Hosmer of M&T said most branches reported fairly light volume and very few account closures.

He said a toll-free phone center set up to handle customers' questions had received only eight calls as of midafternoon.

paul.west@baltsun.com

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