Depositors Pull $300 Million at Texas Bank : NCNB Says Guarantee Change Prompted Run

NCNB Texas National Bank depositors have withdrawn about $300 million from the bank in recent weeks, and bank officials say the total could double.

“We’re concerned--but only because we would like to hang on to every deposit and customer we can,” said Timothy Hartman, NCNB’s vice chairman.

Hartman said this week that the withdrawals apparently reflect concern about the approaching end of a full guarantee on deposits and the loss of additional deposit insurance that was available through the 40-bank system of NCNB Texas’ predecessor, First RepublicBank Corp.

In late July, Charlotte, N.C.-based NCNB acquired the former banks of First RepublicBank from the Federal Deposit Insurance Corp. NCNB agreed to invest up to $240 million for the 130 Texas banking locations of First RepublicBank, which was declared insolvent.

NCNB initially will acquire a 20% stake in the bank but has an option to buy the rest from FDIC, which promised to pump $4 billion into the Texas institution.

The latest announcement does not affect the normal $100,000 coverage offered to depositors in all federally insured institutions.

Blanket Coverage to Stop

“I don’t know if it is possible to find a more sound institution anywhere,” Hartman said.

Under terms of an agreement announced July 29, FDIC planned to withdraw the blanket insurance coverage of all deposits that it installed in March after a run on First RepublicBank.

Hartman said NCNB has alternative sources of funding--including $3 billion in cash due from FDIC as part of the transaction--and faces no cash squeeze because of withdrawals.

In fact, NCNB expects withdrawals to total as much as $600 million, about 10% of the $6 billion in the $100,000-plus accounts the bank maintains.

Hartman said depositors apparently had grown accustomed to the luxury of multibank insurance.