The Phoenix Cos. walked away from TARP assistance after a bank it was hoping to acquire failed and was seized by the Federal Deposit Insurance Corp.
The Hartford, Conn.-based insurance company is the fourth carrier to drop out of the running for federal aid through the Capital Purchase Program, a component of the U.S. Treasury’s Troubled Asset Relief Program.
The insurer first applied for federal aid last fall, entering an agreement to acquire American Sterling Bank of Sugar Creek, Mo., and obtaining savings and loan status, which is a requirement for TARP eligibility. Phoenix’s purchase of American Sterling was conditional upon the carrier getting aid through TARP.
However, Phoenix found out last Friday that the FDIC, at the bidding of the Office of Thrift Supervision, had closed the bank and became its receiver. In connection with the receivership, Metcalf Bank of Lee’s Summit, Mo., has stepped in to take on the failed bank’s deposits and purchase its assets from the FDIC. As of March 20, American Sterling had $181 million in assets and $171.9 million in deposits. Metcalf, along with accepting the failed bank’s deposits, also has purchased about $173.6 million in assets, leaving the rest to the FDIC for later disposition.
American Sterling had been on the OTS radar screen as recently as last summer, when the regulator discovered a critical lack of capital, poor record keeping and liquidity issues. Last August, the OTS also hit the bank’s board of directors with a cease-and-desist order, along with directives to fix its problems.
The closure of American Sterling and the elimination from TARP are the latest blows for Phoenix, which has been suffering from a series of ratings downgrades, investment losses and major losses of its distribution channels.
Calls to Phoenix and the FDIC were not immediately returned.
