Citing unsound practices, federal regulators on Friday shut down Sterling-based Millennium Bank and handed over its deposits and two branches to WashingtonFirst Bank, according to the Federal Deposit Insurance Corp.
Millennium Bank, which had roughly $130.3 million in assets, had engaged in “unsafe and unsound practices” that led to large losses and a depletion of capital, according to a statement from the Office of the Comptroller of the Currency, the regulatory board that closed the bank.
“The bank is critically undercapitalized, and there is no reasonable prospect that the bank will become adequately capitalized,” the OCC said in a statement released Friday afternoon.
Millennium’s two branches, located in Sterling and Herndon, will reopen as branches of WashingtonFirst Bank on Monday, March 3. As a result, WashingtonFirst will operate 17 retail banking offices, including 11 in Virginia, four in Maryland, and two in the District.
“We want to be strategically placed in all of the hot markets in the Washington metro area,” said Shaza Andersen, chief executive of WashingtonFirst. “Millennium is in our backyard, so it was a perfect fit for us.”
The purchase will give WashingtonFirst a presence in Herndon. The bank, which already has a location in Sterling, plans to consolidate the two Sterling branches within the next 60- to 90 days, Andersen said.
WashingtonFirst executives completed due diligance on Millennium bank in early February. They were notified by regulators on Monday that the deal would be finalized Friday.
“It’s all happened very quickly,” Andersen said.
WashingtonFirst, which has roughly $1.13 billion in assets, paid a 1 percent premium, or $1.22 million on Millennium deposits to take over the accounts. In return, it will receive approximately $122 million in deposits, $60 million in loans, $76 million in cash and marketable securities from Millennium. The FDIC will retain all other real estate owned by Millennium. There will be no agreement to share losses between the FDIC and WashingtonFirst.
Millennium Bank’s financial results have suffered in recent quarters. In 2013, total assets were down 17 percent, while loans fell 34 percent. Millennium ended the year with a $4.82 million loss.
Cape Henry Bankshares Co., a Virginia Beach-based institution, had sought to buy Millennium in 2012. The deal later fell through.
Millennium Bank is the fourth FDIC-insured institution to close this year, and the first to be shuttered in Virginia since 2011.