Officials with U.S. Bank assure there are no plans to change services or close branches of BankEast, the troubled Knoxville enterprise it bought Friday after the death knell was sounded for BankEast.

U.S. Bank Vice President John Elmore said BankEast locations opened as normal Monday morning, though they did so for the first time as part of U.S. Bank, the fifth-largest financial institution in the country. All accounts, which are backed by the FDIC, have been fully protected and everything is "business as usual" for what was BankEast, which will be rebranded over the coming months.

By Monday morning, there were signs in local BankEast locations, including the ones on the Parkway in Sevierville and on Chapman Highway in Seymour, bearing the U.S. Bank logo. There were none that specifically explained exactly what happened between Friday and Monday, and some that carried that story posted by state regulators at the end of last week did not remain.

After years of struggling to combat toxic loans and being under the watchful eye of regulators, BankEast was officially declared insolvent Friday. It was closed by the Tennessee Department of Financial Institutions, put into receivership for the Federal Deposit Insurance Corporation and officially transfered to U.S. Bank in short order.

"BankEast ... was closed today by the Tennessee Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver," a statement from FDIC spokesman Greg Hernandez said. "To protect the depositors, the FDIC entered into a purchase and assumption agreement with U.S. Bank National Association, Cincinnati, Ohio, to assume all of the deposits of BankEast.

"The ten branches of BankEast will reopen on Monday as branches of U.S. Bank National Association. Depositors of BankEast will automatically become depositors of U.S. Bank National Association. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits."

Though the accounts are the same, Hernandez said it may take some time before U.S. Bank can move them into their system, so for now those who used BankEast cannot use existing U.S. Bank locations.

In the deal, U.S. Bank took over the $268.8 million in total deposits at BankEast as of Sept. 30 and "agreed to purchase essentially all of the assets," Hernandez wrote. Those assets totaled $272.6 million on last review.

The quick transaction to put BankEast in U.S. Bank's hands was actually the result of extensive planning for the institution's impending demise.

"We have been involved in the bid process (to buy BankEast) for about a month, but we did not know we had the successful bid until last Tuesday," Elmore explained. "When this opportunity presented itself, it was definitely something we wanted to look into. Knoxville is a very attractive area for banking. It has always been a market we have coveted, quite honestly."

Though U.S. Bank operates its Elavon payment processing branch in the area, with 1,100 employees already in Knoxville, it has never had branches in this area. For the time-being, at least, all the BankEast locations will remain open, including those in Sevier County, Elmore said. That's despite an already heavily-loaded finance industry here.

"The branches will continue business as usual," he said. "We compete with community banks nationally. We have a community banking model we use within U.S. Bank. We feel we can compete with anyone. I know there are some good organizations (in Sevier County), but we're not afraid of competition."

As of early Monday afternoon, there hadn't been a run on accounts or any other reaction by account holders to the news of the sale, though some asked questions of staff. U.S. Bank was prepared for that and had "ambassadors" stationed at each location to address concerns or queries, Elmore said.

"People step in because they want to see that their friends and bankers are still there. As long as the employees are happy, the account holders are happy," he elaborated. "It has been, from what we have heard from the BankEast employees, a very smooth day."

To help ease the transition, the BankEast website was converted by Monday into one welcoming customers to U.S. Bank. It includes answers to expected questions and the reassurance at the very top that, "Your accounts are safe!"

In addition to the website, the entire BankEast system is expected to be rebranded to U.S. Bank, with the name changed on buildings, debit cards and everything in between. That process is projected to be completed in the second quarter of 2012.

While everyone agrees the deal to salvage BankEast was preferable to any other course, there will be some cost for the FDIC, Hernandez conceded.

"The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $75.6 million," he wrote. "Compared to other alternatives, U.S. Bank National Association’s acquisition was the least costly resolution for the FDIC's DIF. BankEast is the seventh FDIC-insured institution to fail in the nation this year, and the second in Tennessee."

That fact is telling of the way the economy continues to struggle and how banks are still feeling the hurt from the end of the real estate bubble. The other bank in the state that failed this year, which is still only a month old, was Tennessee Commerce Bank of Franklin, which also shut its doors for the last time on Friday.

dhodges@themountainpress.com