Tioga-Franklin Savings Bank failed in August due to the high costs of expanding its mortgage business, a federal watchdog found.
Following financial issues that began with its mortgage business expansion, over time, “the bank’s condition deteriorated due to weak earnings which led to liquidity and capital issues,” the Federal Deposit Insurance Corp.’s Office of the Inspector General said Friday.
“While the bank attempted to resolve its liquidity and capitalization issues by securing new investors, it was unable to do so,” the watchdog found. “The bank finally failed because it was unable to find new investors to stabilize its finances.”
Pennsylvania’s Department of Banking and Securities took over Tioga-Franklin and appointed the FDIC as receiver Aug 21.
The single-branch Philadelphia-based bank had $66,849,160 in total assets, and its failure caused an estimated loss of $5,445,000 to the Deposit Insurance Fund, according to the FDIC.
The estimated total loss is roughly 8% of the bank’s total value. That’s smaller than the 20% average losses to the DIF from other recent failures. The FDIC “did not find this loss to be of sufficient magnitude or significance to warrant an in-depth review,” according to the report.
The FDIC, for its part, identified several concerns at Tioga-Franklin since 2022, and took formal and informal actions to resolve the issues.
Tioga-Franklin’s failure followed roughly three years of downgraded CAMELS ratings. Examiners downgraded the bank to a Composite 4 in July 2023 due to asset quality, insufficient earnings, and management oversight; and its liquidity rating fell from 4 to 5 in March 2024 “due to a material decline in readily accessible cash and lack of availability in contingent funding sources.”
The bank was the subject of parallel consent orders by the FDIC and Pennsylvania regulator the following month; and in December 2025, the FDIC issued a Problem Bank Memorandum due to “poor management oversight and weak risk management practices following a significant turnover in key Board and executive positions” between April and June 2023.
Tioga-Franklin was labeled Composite 5 and deemed undercapitalized in February, and further downgraded to significantly undercapitalized in May. In August, it was deemed critically undercapitalized – the most severe category – and the bank failed.
The OIG did not find any other relevant conditions or circumstances that significantly contributed to the bank’s failure, according to its report.
