No Buyer for Farmers Savings; FSLIC to Reimburse Depositors

Federal officials Monday closed Farmers Savings Bank after failing to find a buyer for the financially troubled institution and said they would begin reimbursing depositors Tuesday.

Federal officials replaced Farmers management in 1985, saying the bank had suffered losses by aggressively seeking high-yield accounts of $100,000 or more and investing in “high-risk ventures,” according to Andrea Plater, a spokeswoman for the Federal Home Loan Bank Board and the Federal Savings & Loan Insurance Corp.

But a search for a buyer for the bank did not turn up any prospects, said Plater. “It just wasn’t an attractive property to market,” she added. “We had no recourse but to liquidate.”

She said the FSLIC would begin the process of repaying depositors today. The FSLIC insures up to $100,000 per account in a particular category, meaning that a person who had more than $100,000 in accounts in different categories could collect more than $100,000, Plater said.

Farmers had assets of $181.5 million on May 31, but its liabilities totaled $334.7 million, the bank board said.

Farmers had $324 million in deposits in 2,999 accounts, and even though it sought deposits of $100,000 or more, officials estimate that less than $1 million of the $324 million may not be insured, according to Plater.

The bank had one office, in Davis.

Federal officials filed a lawsuit against Farmers’ former managers and officers in 1986, seeking more than $100 million in damages. The suit is pending in federal court in Sacramento, Plater said.