Barnes Bancorp closed by federal regulators

Barnes Bancorp closed by federal regulators
Deseret News
Friday, Jan. 15, 2010 11:20 p.m. MST

SALT LAKE CITY — Kaysville-based Barnes Bancorp Inc. was closed Friday by the Utah Department of Financial Institutions after several troubled months and a formal investigation by federal regulators.

Barnes Bank is the first Utah financial institution to have failed in 2010. The last local bank to fail was Layton's America West Bank, which went under in May of last year.

An agency has been created to handle the assets and accounts of Barnes Bank. Managed by Zions Bank, the Deposit Insurance National Bank of Kaysville will mail checks to holders of Barnes CDs and IRAs on Tuesday, according to a news release from the Federal Deposit Insurance Corporation.

The Barnes Bank Web site refers customers to the FDIC for information. Deposits and some special accounts are insured up to $250,000, according to federal law. Other accounts are fully insured.

Checks written through Barnes Bank will be honored until Feb. 12, according to the FDIC, and ATMs will be open until Jan. 29. Customers with loans financed by Barnes Bank are encouraged to continue making regular payments.

Barnes Bank has nine locations along the Wasatch Front and one in St. George. They will be open from 9 a.m. to 1 p.m. Saturday under management of Zions Bank and will reopen Tuesday for an interim transition period.

"We're really here to help. Barnes Bank has a legacy of providing quality service to families and businesses in the community since 1891, so we want to help their former clients through this transition," said Scott Anderson, president and chief executive officer of Zions Bank. "This is an extremely difficult situation for everyone, but we are prepared to answer questions, provide support and comfort, and assist former Barnes Bank clients into new banking relationships."

In May, Barnes Bank officials met with the FDIC over problems with board oversight and credit risk-management practices, among other issues. The bank also struggled with maintaining sufficient capital, employees said at the time.

Late Friday, the Utah Highway Patrol was at the bank's headquarters to provide security for FDIC auditors.

The closure of the Utah bank will cost the FDIC's deposit insurance fund an estimated $271.3 million.

As of last September, Barnes had $827.8 million in total assets and $786.5 million in total deposits. When it closed Friday, there were approximately $100,000 in deposit funds that potentially exceeded the insurance limits.

For more information, visit fdic.gov. Customers who may have uninsured accounts should call 1-800-528-4893 to set up an appointment.

e-mail: rpalmer@desnews.com
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