Tag Archives: BankEast

Sundquist, Comptroller, Former Banking Commissioner and State Rep Had Ties to Failed Bank

A former Tennessee governor and the state’s current comptroller are among public figures with ties to an East Tennessee bank whose closure by regulators was one of the state’s first bank failures in nearly a decade, reports The Tennessean.
Former Gov. Don Sundquist sat on the Knoxville-based BankEast’s board. He and Comptroller Justin Wilson owned shares in its holding company.
After the bank’s failure last month, and the purchase of much of its assets by U.S. Bank, their BankEast stock is considered worthless.
State Rep. Joe Armstrong, D-Knoxville, also served on BankEast’s board and listed the bank as a source of income in a filing with the Tennessee Ethics Commission. He received a business loan from the bank.
BankEast failed after real estate, construction and other loans went sour amid the economic downturn. The bank’s 10 branches now fly the corporate flag of U.S. Bank. The Minneapolis-based company bought much of the failed bank’s assets, including $272 million of loans, and assumed $268 million of deposits
BankEast’s holding company, in which Sundquist, Wilson and others owned stock, wasn’t part of the U.S. Bank purchase. Typically, shareholders of a failed bank lose their money because they fall behind depositors and holders of unsecured and subordinated debt on a list of priority of creditors’ claims.
…Sundquist held 2 percent of voting shares in BankEast’s holding company at year-end 2010, according to BankEast Corp.’s most recent annual report filing with a regulator.
The ex-governor declined to comment on his ties to the bank, whose lead founder and chairman, Fred Lawson, was banking commissioner during the Sundquist administration. Sundquist was governor from 1995 to 2003 and was a congressman for a dozen years before that.

State Regulators Take Over BankEast of Knoxville

News release from state Department of Financial Institutions:
NASHVILLE – The Tennessee Department of Financial Institutions (“Department”) took possession of BankEast, Knoxville, Tennessee at 6:00 p.m. EST on January 27, 2012. The Department has appointed the Federal Deposit Insurance Corporation (“FDIC”) as Receiver of the Bank effective upon the Department taking possession of BankEast.
The Department took possession of BankEast due to BankEast’s impaired capital, unsound condition and the bank’s inability to continue normal operations.
Through an agreement with the FDIC, all deposit accounts of BankEast have been transferred to U. S. Bank National Association and will be available immediately. Depositors of BankEast will automatically become depositors of U. S. Bank National Association. Depositors will be able to access their accounts at the former main office and branch locations of BankEast during regular business hours. Customers of both banks should continue to use their existing branches until U. S. Bank National Association can fully integrate the deposit records of BankEast. Additionally, the former depositors of BankEast can continue to access their accounts through automated teller machine transactions, checks and debit transactions.
Since all deposits transferred to U. S. Bank National Association there will be no loss exposure to former customers of BankEast. The FDIC has established a website and a toll-free phone number to answer questions from depositors, creditors and other interested parties regarding the receivership of BankEast. Please refer to the FDIC’s website at http://www.fdic.gov/bank/individual/failed/bankeast.html for further information regarding the details of the transaction. The toll-free number is 1-800-517-1839. The phone number will be operational this evening until 9:00 p.m., Eastern Standard Time (EST); on Saturday from 9:00 a.m. to 6:00 p.m., EST; on Sunday from noon to 6:00 p.m., EST; on Monday from 8 a.m. to 8 p.m., EST; and thereafter from 9:00 a.m. to 5:00 p.m., EST.
The Department’s Commissioner, Greg Gonzales, reminds depositors that deposits for all Tennessee banks are insured by the FDIC up to $250,000. Special rules are in place for accounts held in trust status and joint accounts that may further expand deposit insurance coverage. Additional information on FDIC Deposit Insurance may be found at www.fdic.gov.