On Monday, Franklin Bank in Kingsland was open and doing business as normal. All the same employees were staffing the bank during its regular hours.

Business as usual is newsworthy since Franklin Bank was closed by regulators three days earlier.

On November 7, Franklin Bank was closed by the Texas Department of Savings and Mortgage Lending and the Federal Deposit Insurance Corporation was named receiver. No advance notice is given to the public when a financial institution is closed.

The FDIC entered into a purchase and assumption agreement with Prosperity Bank, El Campo, Texas, to assume all of the deposits of Franklin Bank, including those that exceeded the insurance limit.

Franklin Bank’s 46 offices re-opened Monday as branches of Prosperity Bank. Depositors of the failed bank automatically become depositors of Prosperity Bank.

David Barr, an FDIC spokesperson said, “Customers of both banks should continue to use their existing branches until Prosperity Bank can fully integrate the deposit records of Franklin Bank.

Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage.”

Barr warns customers, “Neither the FDIC as receiver nor Prosperity Bank as the acquiring institution will e-mail customers of Franklin Bank asking them to validate their deposits or to request personal, confidential information, such as account numbers, Social Security Numbers or driver’s license numbers.

If customers receive e-mails asking for such personal information, they should consider them to be fraudulent in nature and should not respond.”

The FDIC estimates that the cost of the transaction to its Deposit Insurance Fund will be between $1.4 billion and $1.6 billion.

Barr said Prosperity Bank’s acquisition of all deposits was the “least costly” resolution for the FDIC’s Deposit Insurance Fund compared to alternatives.

Franklin Bank is the eighteenth bank to fail in the nation this year, and the first in Texas since Bank of Sierra Blanca, Sierra Blanca, Texas, on January 18, 2002.

As of September 30, 2008, Franklin Bank had total assets of $5.1 billion and total deposits of $3.7 billion.

Prosperity Bank agreed to assume all the deposits, including the brokered deposits, for a premium of 1.7 percent.

In addition to assuming all of the failed bank’s deposits, Prosperity Bank will purchase approximately $850 million of assets. The FDIC will retain the remaining assets for later disposition.

“Prosperity Bank is pleased that we were able to work with the FDIC and offer all of Franklin Bank’s deposit customers a new community banking home without the loss of any of their deposits,” said David Zalman, chairman and chief executive officer of Prosperity.

“It has been our primary goal at Prosperity to maintain capital strength and excellent customer service. Franklin Bank’s customers will continue to enjoy the same type of people to people banking. Prosperity is committed to taking care of their existing and new customers during this volatile time in the financial industry.”

“It is our goal to make sure that this transaction will be a smooth process for Franklin Bank’s customers and associates.

The customers will be able to go about their business as usual; they will be able to access their money and use their ATM/ Debit Card, Internet Banking, bill pay service or other electronic banking services,” said Dan Rollins, President of Prosperity Bank.

Prosperity Bancshares, Inc. (NASDAQ: PRSP), a $10.5 billion Houston based regional financial holding company, was formed in 1983.

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