Michigan Financial Institutions Bureau Commissioner Patrick M. McQueen announced today that ShoreBank, Detroit, a newly formed state-chartered bank subsidiary of Shorebank Corporation, has assumed all deposit liabilities of OmniBank, River Rouge, Michigan. All deposits of OmniBank are protected, and the new bank will open on Friday, April 10. The Eastern Market branch will not reopen, however, depositors will have full and complete access to their money under the terms and conditions of their deposit agreements at all other ShoreBank, Detroit offices.

Shorebank Corporation, a 26-year old, $700 million organization headquartered in Chicago, is not a stranger to Michigan, having operated a loan production office in Detroit and Shorebank BIDCO, Inc., in Marquette for several years. "We are fortunate," Commissioner McQueen stated, "to have so highly respected an institution as Shorebank participate in protecting the deposits of a failed institution."

The Federal Deposit Insurance Corporation (FDIC) was appointed Receiver of OmniBank following the Commissioner's determination that the bank was in an unsafe and unsound condition. Following a joint examination by the Financial Institutions Bureau and the Federal Reserve Bank of Chicago, a Prompt Corrective Action Directive was served on OmniBank in January 1998. The terms of the directive were not met. Commissioner McQueen declared OmniBank in an unsafe and unsound condition and petitioned the Wayne County Circuit Court to appoint FDIC as Receiver for the failed bank. Honorable Michael F. Sapala, Chief Judge, granted the Commissioner's petition on April 9, 1998.

"This action was necessitated by serious deficiencies in the management of OmniBank, resulting in intolerable loan and operational problems and capital issues which were not properly addressed by its Board of Directors," McQueen stated. The resolution of OmniBank was complicated by several large public fund deposits that were in jeopardy, including deposits of the cities of Detroit, Highland Park, and River Rouge, and the River Rouge School District.

The problems of OmniBank represent an isolated incident, and are not related to any systemic banking factors. This is the first state-chartered bank failure in Michigan since 1988.

For background information, check these Web sites:

Shorebank, Chicago http://www.sbk.com/livesite/main/
Federal Deposit Insurance Corporation http://www.fdic.gov/
Federal Reserve Board of Governors http://www.federalreserve.gov/