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Office of the Commissioner of Financial Regulation

 

Regulators Take Possession of HarVest Bank of Maryland and Bank of the Eastern Shore

 

BALTIMORE, MD (April 27, 2012) - Maryland Commissioner of Financial Regulation Mark Kaufman took possession today of HarVest Bank of Maryland, headquartered in Gaithersburg, Maryland, and Bank of the Eastern Shore, headquartered in Cambridge, Maryland, causing the Federal Deposit Insurance Corporation ("FDIC") to be appointed as receiver of both institutions.

The Commissioner took possession of these institutions in order to protect depositors and the public. The Division of Financial Regulation, along with the FDIC and the Federal Reserve Bank of Richmond had been closely monitoring these institutions and efforts to raise capital to a safe and sound level were unsuccessful. Following a period of losses, management of both institutions were unsuccessful in efforts to sell or recapitalize the institution. Consequently, the Boards of Directors of HarVest Bank of Maryland and Bank of the Eastern Shore voted to turn possession of the institutions over to the Commissioner.

"Unfortunately, both institutions were significantly impacted by the economic and real estate downturn and were unable to find additional capital to restore themselves to sound condition," said Commissioner Kaufman. "At the same time, these are isolated instances and the banking system in our state remains safe and sound. We work diligently with our counterparts at the FDIC and the Federal Reserve to ensure that our institutions operate safely, and to assist them in meeting the challenges of the current economic environment. Likewise, all bank deposits are insured by the FDIC up to $250,000 per depositor."

HarVest Bank of Maryland
HarVest Bank of Maryland's deposits and assets were immediately acquired by Sonabank, a subsidiary of Southern National Bancorp of Virginia, Inc., in a purchase and assumption transaction arranged by the FDIC. Headquartered in McLean, Virginia, Sonabank is a Virginia state-chartered bank with more than $600 million in assets and fifteen branches including one branch located in Rockville, Maryland. HarVest Bank of Maryland has four branches located in Bethesda, North Rockville, Germantown and Frederick.

All depositors of HarVest Bank of Maryland will automatically become depositors of Sonabank. Branches will reopen for customers on their normal schedule as branches of Sonabank, including the Germantown branch, which will reopen on Saturday morning. The other three branches do not have Saturday hours and will reopen Monday as branches of Sonabank. All HarVest depositors will automatically become depositors of Sonabank and deposits will continue to be insured by the FDIC. Tonight and throughout the weekend, HarVest Bank depositors can continue to access their funds by writing checks and utilizing their existing ATM and/or debit cards.

"Customers of HarVest Bank can expect no disruption," said Commissioner Kaufman. "Sonabank has demonstrated experience executing acquisitions and is expanding its presence in Maryland with this transaction."

HarVest Bank of Maryland was chartered in 2004 with its headquarters located at 15810 Gaither Drive, Gaithersburg, Maryland. As of December 31, 2011, HarVest Bank of Maryland had total assets of approximately $164 million and total deposits of approximately $145 million.

The FDIC has established a website and a toll-free number to answer questions from depositors, creditors, and other interested parties regarding its receivership of HarVest Bank of Maryland. The toll-free number is 800-523-8275. It will be operational this evening until 9 p.m. EST; on Saturday from 9 a.m. to 6 p.m.; on Sunday from 12 noon to 6:00 p.m.; Monday from 8 a.m. to 8 p.m.; and thereafter during regular business days from 9 a.m. to 5 p.m.

Bank of the Eastern Shore
The FDIC was unable to find another financial institution to take over the banking operations of Bank of the Eastern Shore. To protect depositors and facilitate an orderly resolution, the FDIC created the Deposit Insurance National Bank of Eastern Shore ("DINB of Eastern Shore"), which will remain open for approximately 30 days and, beginning Monday, operate during the bank's traditional business hours. This time will allow depositors access to their insured deposits through the bank and its ATMs and time for customers to open accounts at other insured institutions.

At the time of closing, all insured deposits of Bank of the Eastern Shore were transferred to DINB of Eastern Shore. Holders of certificates of deposit (CDs) and individual retirement accounts (IRAs) will have their proceeds mailed to them. The receiver also transferred to the DINB all secured public unit deposits.

"We appreciate the FDIC's cooperation in establishing the Deposit Insurance National Bank," said Commissioner Kaufman. "This ensures that customers will be able to transition their accounts smoothly and depositors will maintain full access to their insured deposits with minimal disruption to customers or the community."

Bank of the Eastern Shore was chartered in 1986 with its headquarters and main branch located at 301 Crusader Road in Cambridge, Maryland. The bank has a second branch located a 1025 Washington Street in Cambridge. As of December 31, 2011, Bank of the Eastern Shore had total assets of approximately $167 million and total deposits of approximately $155 million.

The FDIC has established a website and a toll-free number to answer questions from depositors, creditors, and other interested parties regarding its receivership of Bank of the Eastern Shore. The toll-free number is 1-800-591-2817. It will be operational this evening until 9 p.m. EST; on Saturday from 9 a.m. to 5 p.m.; on Sunday from 12 noon to 6 p.m.; on Monday from 8 a.m. to 8 p.m.; and thereafter during regular business days from 9 a.m. to 5 p.m.

The Office of the Commissioner of Financial Regulation is responsible for the supervision of Maryland chartered-banks, credit unions and trust companies, as well as non-depository financial service providers such as mortgage lenders. The Office of the Commissioner works to maintain the integrity of the Maryland financial services industry and protects the interests of depositors, borrowers, shareholders and consumers through effective regulation.

Questions or comments regarding the Commissioner of Financial Regulation may be directed to DLLR Public Affairs Specialist Shannon Davis at 410-230-6069.

The Department of Labor, Licensing and Regulation protects and empowers Marylanders by safeguarding workers, protecting consumers, providing a safety net and cultivating a thriving workforce that can meet the demands of Maryland’s dynamic economy. Follow DLLR on Twitter (@MD_DLLR) and Facebook.