Public Savings Bank closed on Thursday, ending more than 85 years of business in Huntingdon Valley, Pa. It’s the 65th bank closing of 2011 and the first of the year in Pennsylvania, a state that dodged much of the scores of closings since the financial collapse in 2008. But for Public Savings, the failure was considered inevitable for some time. The Pennsylvania Department of Banking shuttered the bank, and the Federal Deposit Insurance Corp. appointed Capital Bank in Rockville, Md., as the receiver. Capital Bank agreed to assume all $45.8 million of deposits and essentially all $46.8 million of assets. Spokesmen for the FDIC and the Pennsylvania Department of Banking said when a bank closes, they rely heavily on employees to work late into the night and ready the bank for reopening the next morning under receivership. “That would have interfered with the beginning of the Sabbath if it was closed Friday night,” an FDIC spokesman said. “This one was closed on a Thursday due to the relationship with the Orthodox Jewish community and ownership of the bank.” Data analytics firm Trepp said Public Savings had been on their watch list for the last nine quarters, and by the time it failed, the bank held a failure risk score of 10 – their highest score possible. Unlike most small bank failures, though, Trepp said commercial mortgages were “a secondary factor” to the closing. Residential mortgages accounted for 62% of the banks’ nonperforming loans or roughly $6.1 million. The banks’ liquidity was a problem, as well. According to Trepp, the Public Savings liquidity ratio dropped to dangerous low levels. A liquidity ratio determines the banks’ ability to pay-off short-term debt obligations. The higher the value, the more safety net there is. Small banks averaged a liquidity ratio of 28.7% in the second quarter. Public Savings held a ratio of 10.2% at the end of 2010, and although it pushed up to 14.2% by the time it closed, it wasn’t enough. The FDIC expects the closing to cost its deposit insurance fund $11 million. Write to Jon Prior. Follow him on Twitter @JonAPrior

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