NEW YORK -- The New York State Superintendent of Banks put Dollar Dry Dock Bank into receivership Friday, and Emigrant Savings Bank assumed most of the savings bank's assets and certain liabilities.
Dollar Dry Dock, headquartered in White Plains, N.Y., with a number of branches in New York City, had been struggling with bad real estate loans for several years, an official with Federal Deposit Insurance Corp. said.
New York State Superintendent of Banks Derrick Cephas took possession of the Dollar Dry Dock, which haddeposits of about $3.7 billion, and appointed the FDIC receiver.
Robert Hartheimer, associate director in the FDIC's division of resolutions in Washington, said the main factor that drove Dry Dock to the financial brink was problems with real estate loans in the past few years.
'We orchestrated the sale process of Dollar Dry Dock in December,' he said.
Clare Sykes, a spokeswoman for the New York State Banking Department, said, 'All depositors are protected and it's business as usual.'
Sykes said Dollar Dry Dock 'was not insolvent, but its net worth was basically intangible. They did not have the sufficient capital to continue operating.'
Twenty of Dollar Dry Dock's 21 branches will reopen Monday as Emigrant branches; the remaining branch has been sold to Apple Savings Bank. The new Emigrant branches are located in Manhattan, the Bronx, Queens, Nassau and Westchester counties. The Apple branch is in Queens.
Emigrant has agreed to purchase $3.6 billion of Dollar Dry Dock's loans and $3.6 billion of its loans, Hartheimer said, while Apple will assume $120 million of the deposits.
Emigrant is not purchasing subsidiaries or real estate obtained from foreclosed loans, the FDIC said. Emigrant will have three years to return to the FDIC classified assets -- those designated by government examiners as having some degree of potential loss -- up to a maximum of $985 million.
But for the first two years, Emigrant cannot return to the FDIC any classified loan that still is performing in accordance with its terms, the FDIC said.
To set the transaction between the FDIC and Emigrant in motion, the FDIC agreed to purchase 339,000 shares of Emigrant preferred stock for $33.9 million.