Introduction
In an announcement released on Friday, December 4, 2009, Amtrust Bank, based in Cleveland, Ohio, was closed by the Office of Thrift Supervision (OTS), with the Federal Deposit Insurance Corporation (FDIC) appointed as receiver. It’s important to note that bank closures of this nature are not publicly announced in advance. If you were a customer of AmTrust Bank, it is crucial to be aware of official communications and disregard any unsolicited emails requesting personal information, as these could be phishing scams. The FDIC provided comprehensive details to assist customers in understanding the implications of this event on their various banking relationships, from checking accounts and Certificates of Deposit to loans and direct deposits.
Official Press Release
The FDIC issued an official press release (PR-222-2009) at the time of the closure, detailing the specifics of the situation. For media inquiries related to the AmTrust Bank closure, the designated contact was David Barr, who could be reached at 1-202-898-6992. This press release served as the primary source of verified information during the initial stages of the bank’s transition.
Acquisition by New York Community Bank
Crucially, all deposit accounts of AmTrust Bank were seamlessly transferred to New York Community Bank, headquartered in Westbury, New York. This “assuming institution” ensured immediate access to funds for AmTrust Bank’s former customers. On Saturday, December 5, 2009, the day following the closure, former AmTrust Bank branches reopened as branches of New York Community Bank.
For a period of six months following the AmTrust Bank failure, transferred deposits were insured separately from any existing accounts held at New York Community Bank. This provided an added layer of security for depositors during the transition. Furthermore, any checks drawn on AmTrust Bank that had not yet cleared before the closure were honored, provided sufficient funds were available in the account. Customers with specific questions about their transferred accounts were encouraged to contact an FDIC representative directly at (888) 206-4662.
For broader inquiries regarding FDIC deposit insurance coverage, the FDIC offered a toll-free line at 1-877-275-3342 and an online resource, EDIE (Electronic Deposit Insurance Estimator), available at EDIE – FDIC’s Electronic Deposit Insurance Estimator.
Recognizing the disruption caused by the bank closure, New York Community Bank allowed customers to withdraw funds from transferred accounts without incurring early withdrawal penalties, as long as the deposits were not pledged as loan collateral. This waiver was in effect until customers entered into new deposit agreements with New York Community Bank. Additional details about New York Community Bank could be found on their website.
It’s important to note a subsequent development: on December 1, 2022, New York Community Bank merged with Flagstar Bank, National Association. Flagstar Bank, National Association now operates the former New York Community Bank branches (www.flagstar.com).
Continued Banking Services
Despite the closure of AmTrust Bank and the transition to New York Community Bank (now Flagstar Bank), essential banking services remained operational. Automated Teller Machines (ATMs) and online banking services continued to be available, ensuring uninterrupted access for customers.
From December 5, 2009, customers were able to continue utilizing services they previously accessed at AmTrust Bank, including safe deposit boxes, night deposit boxes, and wire transfer services. This aimed to minimize disruption to everyday banking activities.
Checks were processed as usual, with all outstanding checks being paid against available balances as if no closure had occurred. New York Community Bank was expected to communicate any changes to account terms to customers. In cases where merchants declined checks due to confusion surrounding the bank transition, customers were advised to contact their local branch to clarify the validity of their checks.
Interest accrued on accounts up to December 4, 2009, was honored at the existing rates. New York Community Bank indicated they would review interest rates, and any subsequent changes would be communicated to customers. Direct deposits and automatic withdrawals were automatically transferred to the new bank, simplifying the transition for customers receiving or making regular payments. Customers with specific questions or requests were advised to contact a representative at their new branch of New York Community Bank.
Information for Loan Customers
For individuals and businesses with loans from AmTrust Bank, the FDIC advised continuing loan payments as scheduled. Loan terms remained unchanged, as stipulated in the original promissory notes. Payment checks should continue to be made payable as before and sent to the existing address until further notice. Loan customers with questions regarding their existing loans were encouraged to contact their loan officer for clarification.
For inquiries about new loans and the lending policies of New York Community Bank, customers were directed to contact their local branch. The FDIC also provided a helpful resource, “A Borrower’s Guide to an FDIC Insured Bank Failure,” offering further guidance to borrowers affected by bank failures.
Claims Against AmTrust Bank
In a notice issued on April 30, 2011, the FDIC determined that the assets of AmTrust Bank were insufficient to satisfy general unsecured claims. This “Determination of Insufficient Assets to Satisfy Claims Against Financial Institution in Receivership” meant that general unsecured creditors of AmTrust Bank would not receive any recovery and their claims were deemed to have no value.
For questions regarding this determination, individuals could contact an FDIC Claims Agent at (904) 256-3925. Written correspondence could be sent to: FDIC as Receiver of AmTrust Bank, 1601 Bryan Street, Dallas, TX 75201-3430, Attention: Claims Agent, or via email to [email protected]. The general customer service number (888) 206-4662 was also available for inquiries.
The FDIC’s decision was based on an assessment of AmTrust Bank’s assets and liabilities as of December 31, 2010. At that time, available assets for distribution were valued at $3,102,153,098, while administrative expenses and depositor liabilities totaled $4,555,852,340, resulting in a shortfall of $1,453,699,242. This deficit led to the conclusion that no funds would be available for general unsecured creditors after covering depositors and administrative costs. Further information and frequently asked questions were available in the “FAQ For ‘No Value’ Determination ” document.
Priority of Claims
Federal law establishes a clear order of priority for claim payments in bank receiverships. After administrative expenses are covered, allowed claims are paid in the following sequence:
- Depositors
- General Unsecured Creditors
- Subordinated Debt
- Stockholders
This priority structure ensures that depositors are first in line to recover their funds, followed by other categories of claimants in descending order of priority.
Dividend Information
Information regarding any dividends paid out to claimants of AmTrust Bank could be found on the FDIC’s website. Specifically, the “Dividend History on AmTrust Bank” page provided details specific to AmTrust Bank. The FDIC also maintained a general resource page for “Dividend Information on Failed Financial Institutions” for information on dividends related to other bank failures.
Brokered Deposits
For deposit brokers acting as agents for investors, the FDIC offered a “Deposit Broker’s Processing Guide“. This guide outlined the procedures and policies brokers needed to follow when filing for pass-through insurance coverage on custodial accounts held in a failed FDIC-insured institution like AmTrust Bank.
Qualified Financial Contracts
The FDIC, as receiver for AmTrust Bank, transferred all Qualified Financial Contracts (QFCs) to New York Community Bank. QFCs encompass a range of financial agreements, including swaps, options, futures, forwards, and repurchase agreements, as defined under 12 U.S.C. Section 1821(e)(8)(D). Refer to the FDIC press release (PR-222-2009) from December 4, 2009, for additional details concerning AmTrust Bank and its closure.
