Famous Last Words for a Failed Bank
Almost exactly one year ago, I interviewed Charles Antonucci Sr., CEO of Park Avenue Bank. His institution was in the news because it withdrew its application for federal Troubled Asset Relief Plan (TARP) funds.
"I don't need TARP money," Antonucci told me, describing what his message was to Park Avenue Bank depositors. "I don't necessarily want TARP money. We are a strong bank, and management is committed to putting capital in as it is needed."
It's easy to say that Antonucci spoke with hubris a year ago, turning his back to TARP money, and a year later his is #28 in the list of 2010's failed banks.
At the time, Park Avenue Bank was roughly a $500 million institution with four retail branches in Manhattan. Like every banking institution, Park Avenue Bank felt the impact of the down economy, but Antonucci was convinced his bank would bounce back strong. "I think that overall we are going to emerge from this much stronger with a much better customer base than we started," he said.
Last Friday, Park Avenue Bank was closed.
It was sort of a sad postscript, really. An announcement from the FDIC, no different than any Friday night bank failure: "The Park Avenue Bank, New York, New York, was closed today by the New York State Banking Department, which appointed the FDIC as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Valley National Bank, Wayne, New Jersey, to assume all of the deposits of The Park Avenue Bank."
The bank had grown to $520 million in assets by the time of its closure, but none of that staved off the inevitable. In the end, Park Avenue Bank's closure and sale were given the standard description of "least costly" resolution.
And by the way, in this case "least costly" means an estimated $50.7 million hit to the FDIC's Deposit Insurance Fund (DIF).
Couple thoughts come to mind here:
First, it's sad to see how this story ended. It's easy to say that Antonucci spoke with hubris a year ago, turning his back to TARP money, and a year later his is #28 in the list of 2010's failed banks. But, alas, this story is far too common these days, and you hate to see any additional banking institution fail. Especially one that's trying to be a bit of a maverick.
The other thing that haunts me is the FDIC's latest estimate of "problem" banks. There are 702 of them on the latest list - the most in 16 years. Not all of these will fail, of course. But here's my question: If they're struggling just for survival, how much investment are these banks making in information security? And at a time when payment card, ATM and ACH fraud crimes are on the rise, what institution can afford to skimp on security?
Scary times, and I look at Park Avenue Bank as a cautionary tale. Not just because of what it says about the ongoing ravages of our economy, but because of what it suggests about security.
Anyone want to take a guess at how long an "insufficiently secured" banks list might be?