Houston-based Franklin Bank was closed Friday by the Texas Department of Savings and Mortgage Lending, and the Federal Deposit Insurance Corporation was named receiver.
The FDIC immediately entered into a purchase and assumption agreement with El Campo-based Prosperity Bank to assume all of Franklin Bank’s deposits, including those that exceeded the federal insurance limit.
Franklin Bank’s 46 offices are reopening as branches of Prosperity Bank and maintaining regular business hours. Depositors of Franklin Bank automatically become depositors of Prosperity Bank.
The FDIC said customers of both banks should continue to use their existing branches until Prosperity Bank can fully integrate the deposit records of Franklin Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change banks to retain their deposit insurance coverage.
As of September 30, Franklin Bank had total assets of $5.1 billion and total deposits of $3.7 billion. Prosperity Bank agreed to assume all deposits, including brokered deposits, for a premium of 1.7 percent. In addition to assuming all of the failed bank’s deposits, Prosperity Bank will also purchase approximately $850 million of assets.
The FDIC will retain the remaining assets for later disposition.
Prosperity Chairman and CEO David Zalman said no Franklin customer will lose any money as a result of the Franklin failure.
“Prosperity Bank is pleased that we were able to work with the FDIC and offer all of Franklin Bank’s deposit customers a new community banking home without the loss of any of their deposits,” Zalman said. “It has been our primary goal at Prosperity to maintain capital strength and excellent customer service. Franklin Bank’s customers will continue to enjoy the same type of people to people banking. Prosperity is committed to taking care of their existing and new customers during this volatile time in the financial industry.”
Prosperity Bank President Dan Rollins added the process should be seamless for Franklin depositors.
“It is our goal to make sure that this transaction will be a smooth process for Franklin Bank’s customers and associates. The customers will be able to go about their business as usual; they will be able to access their money and use their ATM/debit card, Internet banking, bill pay service or other electronic banking services,” Rollins said. “Customers of Franklin Bank should continue to use their existing banking centers until we can complete the data processing conversion, which we anticipate will take place during the first quarter of 2009.”
Franklin Bank was founded in 2001 and headquartered in Houston in the 9800 block of Richmond, between Gessner and Beltway 8. According to its investor relations information, Franklin was “founded to create a Texas-based community bank that concentrates its activities outside the major metropolitan areas.”
In April 2002, Franklin acquired its first community bank, Franklin Bank S.S.B. in Austin, which became a wholly-owned subsidiary of Franklin Bank Corp. The company began trading on the NASDAQ in December 2003 under the ticker symbol FBTX.
On May 9, 2007, Franklin announced the acquisition of The First National Bank of Bryan.
Prosperity Bank currently operates 129 full-service banking locations, including 46 in the greater Houston area, 33 in South Texas, 26 in the Dallas/Fort Worth area, 23 in Central Texas, two in East Texas and a loan production office in San Antonio.
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