On a walk through his neighborhood yesterday, Lawrenceville retiree Theodore Cavacini stopped in front of the Metropolitan Savings Bank and was surprised to learn the 115-year-old institution closed its doors Friday and suddenly had a new name, Allegheny Valley Bank.
Confused, the 73-year-old Mr. Cavacini walked through the door to ask about the security of his money, tied up in a few CDs. "I just want to make sure I don't wind up in the poorhouse," he said.
Mr. Cavacini is one of 1,453 Metropolitan Savings account holders tangled up in the first Pittsburgh-area bank seizure since the collapse of FS&LA of Pittsburgh in 1991 -- and the first in the United States since June 2004. The Pennsylvania Department of Banking shut down the Lawrenceville bank Friday and handed the keys to the Federal Deposit Insurance Corp. Allegheny Valley Bank assumed Metropolitan's insured deposits and reopened the bank yesterday.
State regulators declined to explain what caused the failure. But a filing with the Allegheny County Court of Common Pleas claims the bank was operating in a "unsafe and unsound manner" and it was "likely unable to meet the demands of its depositors." The bank also "refused to cooperate and submit records and affairs to duly authorized examiners in connection with a lawful examination," according to the state. A spokesman said the FDIC will investigate.
As banks go, Metropolitan was a relatively small institution with $15.8 million in assets and a modest storefront at 4415 Butler St., next to an art gallery. But the diminutive bank was a community fixture in Lawrenceville, opening in 1892 and serving the neighborhood's residents almost exclusively.
Allegheny Valley Bank, another Lawrenceville mainstay since 1900, learned Thursday that the state would be seizing its Butler Street neighbor and turning it over to the FDIC. By Friday, Allegheny Valley was the winning bidder for $12 million in FDIC-insured Metropolitan Savings deposits, and it spent the weekend preparing for yesterday's re-opening at 9 a.m.
Signs of the hasty transition were evident as a makeshift Allegheny Valley banner sagged over the front entrance, a "temporarily out of order" sign hung from the ATM and a Metropolitan Savings door mat greeted customers in the lobby. In the back rooms, there were boxes of pizza on the counters and people huddled over calculators and files while a police officer surveyed the scene.
Among the many issues still to be decided yesterday was how to answer the phone, as "Allegheny Valley Bank" or "Allegheny Valley Bank, formerly Metropolitan Savings Bank." The new boss chose the former.
"I am not sure we have slept since Thursday night," said Allegheny Valley President Andrew Hasley.
Allegheny Valley now has 10 branches and about $400 million in assets. It holds 50 percent of all deposits in the Lawrenceville area. Mr. Hasley said he had heard "not a word" of financial distress at Metropolitan and that its financial statements as of Sept. 30, 2006, looked "good." On Jan. 2, the bank sold a neighboring building at 4413 Butler for $235,000, according to county real estate records. It purchased the building for $70,000 in 2003.
"I can't even begin to know," what happened, Mr. Hasley said.
His goal was to make the weekend transition "seamless" for Metropolitan's customers, most of whom will see no change and can continue to pay bills from their Metropolitan accounts. The Federal Deposit Insurance Corp. guarantees accounts up to $100,000 and IRA accounts up to $250,000. The 73-year-old Mr. Cavacini is safely among that group and will lose nothing.
But there are more than 30 account holders with total assets of $1.2 million not insured by the FDIC, according to Mr. Hasley, and the FDIC worked yesterday to find the uninsured people and talk through their options at a hotel in Oakland. Those with assets not covered by the FDIC will become creditors to the receivership of the failed bank, and receive periodic payments from the FDIC as it liquidates assets.
"It's a tough situation," Mr. Hasley said.
Dan Fitzpatrick can be reached at email@example.com or 412-263-1752.