KAYSVILLE -- One of Utah's oldest community banking chains died Friday night as federal and state regulators shut down the Barnes Banking Company and all its 10 branches statewide.
A small group of investors watched in disbelief as dozens of Federal Deposit Insurance Corporation regulators and local sheriff's deputies swooped into the bank shortly after closing time at 6 p.m.
Among the group standing outside the bank's double doors was Christine Gailey, who said her deceased father had been, at one time, a bank official.
"We were led to believe there was some hope. ... I'm in shock," said Gailey, who also described herself as a shareholder who lost millions of dollars.
The bank is scheduled to reopen today in receivership and under a new name, the Deposit Insurance National Bank of Kaysville.
"We are establishing a new temporary bank to allow customers to transition their funds where they want them to go," said Gordon Talbot, an FDIC senior ombudsmen.
Accounts up to $250,000 and some other types of accounts are insured by the FDIC.
The shutdown comes after a year in which Barnes lost at least $67 million, according to FDIC reports filed in late September.
The failed chain was heavily invested in real estate loans, which may have led to the losses at Barnes, officials said.
The Federal Reserve Board on Dec. 15 had given Barnes 30 days to come up with an "acceptable" plan to increase the banking chain's assets, which were "critically undercapitalized" by federal standards.
The deadline for the plan was Friday, and regulators went to a judge in Davis County to get the shutdown order by the end of the day.
Just hours before the bank was taken over, Barnes officials said they were still in talks with possible investors who might add to the needed assets.
The Barnes chain, with most of its branches along the Wasatch Front and one in St. George, was technically closed by the Utah Department of Financial Institutions, which appointed the FDIC as receiver.
Barnes was a state-chartered bank, so both agencies coordinated the takeover.
Barnes Banking Company is the fourth bank to fail this year and the first in Utah.
As of September last year, Barnes had $827 million in total assets and $786 million in total deposits.
At the time of the chain's closing, approximately $100,000 in deposit funds potentially exceeded the insurance limits, regulators said.
The cost to the FDIC's Deposit Insurance Fund is estimated to be $271 million.
Barnes was known as a community supporter that had sponsored various local activities over the years.
"It's sad," said Nick McBride, a Kaysville resident who said he still had a savings account at the bank.
The new, temporary bank chain is to stay open for 30 days as the former customers take a payout or transition their accounts.
Zions Bank contracted with the FDIC to help with the operational support of the transition.
Employees, about 170 of them, will continue at the banking chain for 30 days, Talbot said.
The small Barnes investor group, standing in the cold outside the bank Friday, said they were mourning the loss of both the lifetime investment and a community icon that had first opened in 1891.
"I don't know if we were given all the information we needed, in time," Gailey said.
The FDIC noted that Barnes Banking Company official checks will continue to clear and will be issued to customers closing accounts.
But online services for the former chain will be read-only until Tuesday.
The last FDIC-insured institution closed in the state was America West Bank of Layton in May 2009.
For more information go to: https://www.barnesbank.com/ or http://www.fdic.gov/bank/individual/failed/barnes.html
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KAYSVILLE -- Barnes Banking Co., headquartered in Kaysville, was closed Friday evening by the Utah Department of Financial Institutions.
The Federal Deposit Insurance Corporation, named receiver of the bank, has created the Deposit Insurance National Bank of Kaysville (DINB), which will remain open until Feb. 12, 2010 to allow depositors access to their insured deposits and time to open accounts at other insured institutions.
In a press release, the FDIC said the main office and all branches of Barnes Banking will open from 9 a.m. to 1 p.m., today and the DINB will maintain Barnes Banking Company's normal business hours after that.
Banking activities, such as direct deposit and writing checks, ATM and debit cards, can continue normally for former customers of Barnes Banking Company until Feb.12, according to the release.
The FDIC said it is encouraging all insured depositors of Barnes Banking to transfer their insured funds to other banks during the transitional period. Depositors who have not closed or transferred their accounts by the Feb. 12 deadline will receive checks from the FDIC for for the amount of the insured funds.
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