BREAKING NEWS: Bay National Bank Seized By Regulators Today

Bay National Seized by FDIC

Late today, Federal regulators closed Bay National Bank with has one of its two branch offices in Salisbury. It is the 87th U.S. bank to fail this year.

The Office of the Comptroller of the Currency seized the bank, which had $282.2 million in assets and $276.1 million in deposits as of March 31. The Federal Deposit Insurance Corp. arranged for all the deposits and the two branches of Bay National to be purchased by Bay Bank, based in Lutherville, Md.

Bay Bank also bought "essentially all" the assets of the failed bank, the FDIC said Friday.
The FDIC said the failure is expected to cost the agency's deposit-insurance fund about $17.4 million.

Bay National’s deposits are being assumed by the new entity called Bay Bank FSB. Its two branches will reopen Monday as Bay Bank branches, the Federal Deposit Insurance Corp. said.

Bay National depositors will automatically become depositors of Bay Bank, of Lutherville.

Bay Bank will led by CEO Kevin B. Cashen, a bank consultant and former executive with Chevy Chase Bank and Signet Bank.

Bay National first faced federal regulatory scrutiny 18 months ago, with regulators citing problem loans that drained the bank’s liquidity and capital. Despite talk of turning the bank around by raising new capital and a stock offering, the bank never was able to right itself.

According to Baltimore Business Journal,
"Throughout the bank’s ordeal with regulators, CEO Hugh Mohler has remained quiet. The usually press friendly banker has refused to give interviews in the past three months. He could not be reached for comment Friday.

Mohler, a former Mercantile Bankshares executive and Salisbury based president of Peninsula Bank, founded the bank in 2000 to focus on business lending in Greater Baltimore.

Mohler said in an earlier interview the bank ran into problems when the once hot real estate market in Canton and Federal Hill cooled and borrowers who had taken out loans to rehab houses in those neighborhoods had trouble repaying their loans."

Greg Olinde, a former Senior VP with Bay National has joined the staff of a Cambridge bank. Many locals had invested heavily in Mohler's bank and will lose tens of thousands to hundreds of thousands of dollars.