NORTH PROVIDENCE, R.I. (WPRI) – A small local bank is closing its doors.
Customers at Union Federal Savings Bank received letters last week informing them that the bank is closing its sole branch, at 1565 Mineral Spring Ave. in North Providence, and will transfer their deposits to Bank of Internet USA, a San Diego-based online lender, on June 5.
Citing “business reasons,” the letter said Union Federal’s board “has determined that closing the branch is the best course of action for our customers and our shareholders.”
Union Federal opened in 2001 and was bought in 2006 by First Marblehead Corp. of Boston. But the bank ran into serious trouble during and after the financial crisis as it struggled with its portfolio of student loans, which were the subject of a federal cease-and-desist order from July 2009 to May 2010.
Union Federal’s board voted to dissolve the bank last May, according to a WPRI.com review of regulatory filings by First Marblehead. It stopped originating student loans in June and stopped accepting new mortgage applications in September. The boards of Union Federal and First Marblehead approved the bank’s dissolution plan late last year, and finalized a deal on Dec. 19 with Bank of Internet parent BofI Holding Inc.
“Of the many financial institutions in the market, Union Federal chose to partner with Bank of Internet USA because of the Bank’s competitive products, superior customer service, and their commitment to ethical business practices,” the letter said.
Union Federal had total assets of $144 million and total liabilities of $121 million as of Dec. 31, including $120 million worth of deposits, according to First Marblehead. Its net income totaled $207,000 in the quarter ended Dec. 31.
Once Union Federal is dissolved, First Marblehead “will cease to be a savings and loan holding company subject to regulation, supervision and examination by the Federal Reserve,” according to a regulatory filing.
An employee at the Union Federal branch directed questions to First Marblehead, which did not respond to a request for comment.
Representatives from Bank of Internet will be on hand at Union Federal’s branch from April 14 to April 16 to talk with customers, the letter said. Those with questions were told to call 1-888-226-0819.