Yes.
No. One of the primary phases feeding the neighborhood, including the wye-delta opens.
Then picture it with a neutral.
With the neutral connected, the unbalanced load on the disconnected primary phase is backfed through the bank's delta and the two remaining primary phases.
We used to use these wye-delta banks quite a bit in rural areas to feed irrigation pumps. When the pumps were off, the banks were of sufficient capacity to support the loads on the open phase for quite some time. Sometimes we'd get a call about low voltage. Or sometimes it wouldn't get picked up until a crew would happen to spot an open fuse. Sometimes weeks later.