Initially successful, the company expanded to New South Wales by absorbing the Sydney and Country Bank Limited in 1882.
Both institutions principally invested in speculative land companies, which boomed in the 1880s as the economy expanded, and property prices climbed to a frenzied peak in about 1890.
The boom was followed by a crash, and the precipitous decline in property prices led to the collapse of building societies burdened by unsustainable debts, with the uncertainty soon spreading to banks.
[3] A run by depositors in late 1892 forced the Federal to close its doors "temporarily" on 30 January 1893.
[7] James Munro, already in debt (much to his own companies), had resigned as Premier in early 1892, and left for the UK, but returned voluntarily, and was declared bankrupt in February 1893.