Dive Brief:
- Philadelphia-based Tioga-Franklin Savings Bank was closed by regulators Friday, and Second Federal Savings and Loan Association of Philadelphia agreed to assume all of the bank’s deposits and substantially all of its assets, said the Federal Deposit Insurance Corp., which acted as receiver.
- Single-branch Tioga-Franklin had about $68 million in assets and $67 million in deposits as of June 30, the FDIC said. The bank’s sole location opened Monday as a branch of Second Federal Savings and Loan Association of Philadelphia, and depositors of Tioga-Franklin automatically became depositors at Second Federal.
- The FDIC estimates Tioga-Franklin’s failure will cost the Deposit Insurance Fund about $5.5 million, although that estimate is expected to change as retained assets are sold.
Dive Insight:
Tioga-Franklin is the fifth bank to fail this year. It was founded in 1873, as Tioga Building and Loan Association, according to the bank’s LinkedIn page. It was one of about 22 Black-owned banks in the U.S., according to a Forbes list published this year.
The transaction will give single-branch Second Federal about $115 million in assets, the lender said in a notice on its website. Second Federal, which has about $43.6 million in assets, was established in 1924, and is regulated by the Office of the Comptroller of the Currency.
“We are pleased to welcome Tioga-Franklin Savings Bank’s customers and employees to Second Federal,” Second Federal CEO David Rowland said in a statement on the lender’s website. “Our immediate priority is to ensure a smooth transition and continuity of service. We look forward to building strong, long-term relationships with the Tioga-Franklin customers by delivering responsive, service-focused banking.”
With the deal, Second Federal has acquired Tioga-Franklin’s “more advanced core processing system,” Rowland said in a statement. “This will enable Second Federal to offer a more contemporary range of banking services and products to all of its customers.”
In April 2024, Tioga-Franklin entered into a consent order with the FDIC, after the regulator cited deficiencies in board supervision and direction; management performance; strategic, profit and capital planning; liquidity and funds management; interest rate risk; audit; and credit administration. That followed a 2023 exam that identified weaknesses related to capital, earnings and strategic direction, among other things.
The FDIC consent order also flagged Bank Secrecy Act violations and issues with Tioga-Franklin’s anti-money laundering/counterterrorism financing program, and nonconformance with regulatory guidelines for bank internal controls and information systems, the bank’s internal audit system, loan documentation, interest rate exposure and asset quality, the agency said.
Under the 19-page consent order, the bank’s board was ordered to “immediately increase” its supervision and direction of bank management and its oversight of the bank’s financial condition and operations.
The bank was also directed to bolster its AML/CFT program, conduct a three-year look-back review, ensure that the bank’s Office of Foreign Assets Control compliance program was sufficient, and revise its strategic plan to set goals and performance metrics for returning the bank to profitability and boosting capital, among other things.
