The Office of the Commissioner of Financial Institutions of Puerto Rico shutdown Doral Bank on Friday. The Commissioner appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.
According to the FDIC, Doral Bank had approximately $5.9 billion in total assets and $4.1 billion in total deposits and of December 31, 2014.
Doral Bank is the fourth FDIC-insured financial institution that failed this year. It is the first bank to shutdown in Puerto Rico.
Bank customers are protected by the FDIC
The FDIC entered into a purchase and assumption agreement with Banco Popular de Puerto Rico of Hato Rey to acquire the banking operations including all the deposits of Doral Banks to protect depositors.
According to the FDIC, Banco Popular de Puerto Rico will handle the operations of eight of the 26 former branches of Doral Bank. Banco Popular agreed to purchase $3.25 billion of the shuttered bank’s assets as part of its agreement with the FDIC. It also agreed to pay FDIC a 1.59% premium for the right to assume the deposits of Doral Bank.
Banco Popular de Puerto entered into separate agreements with three banks to acquire 18 of the remaining locations of Doral Bank. Its affiliate, Banco Popular North America will handle the operations of the shuttered bank’s three locations in New York City.
FirstBank Puerto Rico will assume and operate the 10 other branches of Doral Bank in Puerto Rico. Centennial Bank (Conway, Arkansas) will assume and operate the five branches of Doral Bank located in the panhandle area of Florida.
The agreements ensure that all of the costumers of Doral Bank are protected. The FDIC estimated that the cost to the Deposit Insurance Fund (DIF) will be around $748.9 million.
Doral Bank’s 26 branches reopen on February 28
FDIC stated that customers do not need to change their banking relationship to keep the insurance coverage for the deposits. The agency emphasized that it will continue to insure their deposits up to applicable limits.
The customers of Doral Bank will be able to continue to access their money by writing checks, using debits cards or ATM. Customers should continue making payments to their loans as usual, and the checks drawn on the bank will be processed.
According to the FDIC, all the 26 branches formerly operated by Doral Bank will reopen on Saturday, February 28.
The FDIC signed two separate agreements with entities to sell $1.3 billion assets of Doral Bank. The agency expects to close the deal within 30 days. It will retain the remaining assets of the shuttered bank for later disposition.
