Feds close, probe Miami bank

Posted 8:28AM on Saturday 12th January 2002 ( 23 years ago )

MIAMI - Federal regulators are poring over the records of a Miami-based commercial bank that the government shut down for being financially unstable. Hamilton Bank, with some $1.3 billion in assets and $1.2 billion in deposits, was closed by federal regulators Friday evening. The regulators cited concern over the financial soundness of the bank, which specialized in financing trade deals among companies in the United States, Latin America and the Caribbean. Six branches of the bank, with about half the insured deposits, were closed permanently by the Office of the Comptroller of the Currency, a division of the Treasury Department that oversees nationally chartered banks. The Federal Deposit Insurance Corp. was appointed as the bank's receiver. In a statement, the comptroller's office said Hamilton had inadequate capital, poor earnings and too many bad loans. The office also said the bank concealed information from federal examiners. The bank's management ``failed to make significant progress in addressing underlying problems'' and its directors did not hold managers accountable, the agency said. According to an FDIC statement, the bank's assets include about $130 million in ``potential uninsured'' funds in some 3,600 accounts at the bank. It is unclear how much of that money will be recovered. The FDIC said revenue from the disposal of bank assets will be distributed proportionally to customers with uninsured deposits. Uninsured bank deposits can include mutual funds, government securities and funds that are only payable outside the United States. Also, insured deposits are only covered up to $100,000. Late Friday afternoon, Florida Highway Patrol troopers and FDIC officials entered the corporate offices of Hamilton Bancorp in Miami-Dade County. They placed notices on the doors of the main branch informing customers of the bank's closure. Hamilton Bancorp said last month it was cooperating with Securities and Exchange Commission investigators probing the company's accounting and financial reporting. The FDIC said the Israel Discount Bank of New York was taking over three of Hamilton's branches - two in Miami and one in West Palm Beach - along with deposits at those branches. IDB would also acquire the checking, savings and money-market accounts of the six closed branches in Miami, Sarasota, Tampa, Weston and Winter Haven in Florida, and in San Juan, Puerto Rico. Holders of other types of insured accounts at those branches, such as certificates of deposit and IRAs, will be compensated by the FDIC, the agency said. It wasn't immediately known how much Israel Discount Bank was paying for the assets it was acquiring. In recent weeks, Hamilton Bancorp has been in a dispute with the comptroller's office, claiming the office's bank examiners discriminate against Hispanics. The bank filed suit against the Treasury over the alleged bias. Neither officials of Hamilton Bank at its Miami headquarters nor its Washington attorney could be reached immediately for comment after Friday's closure. Regulators did not provide an estimate for the expected loss to the federal insurance fund from Hamilton Bank's failure, but it was thought to be substantial. FDIC spokesman David Barr said that some of the bank's corporate staff would be asked to remain on the job while FDIC reviews the bank's assets.

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