Dedicated to Deposits: Deals, Data, and Discussion

6th Bank Failure of 2009: Ocala National Bank, Florida

POSTED ON BY

This is bank closure #3 for today. Ocala National Bank was closed by the Office of the Comptroller of the Currency (OCC) and the FDIC was named receiver. Here's the FDIC's press release link, and here's a summary of the closure:
  • Closed Bank: Ocala National Bank
  • Location: Ocala, FL
  • Size: 4 branches, $224 million assets, $205 million deposits
  • Possible Uninsured Deposits: ALL deposits Transfered
  • Acquiring Bank: CenterState Bank of Florida
  • Cost to Deposit Insurance Fund: $99.6 million (estimated)
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com
The OCC has its own press release on this closure with an explanation on why the bank was closed:
The OCC acted after finding that the bank had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices. The OCC also found that the bank has incurred losses that have depleted all of its capital, and there is no reasonable prospect that the bank will become adequately capitalized without Federal assistance.

The FDIC Q&A Guide has the complete details. This was an All-Deposit Transfer, so even uninsured deposits were assumed by CenterBank. However, this did not include $17.2 million in brokered deposits. The FDIC will pay the brokers directly for the amount of their insured funds.

There has again been no decision by the assuming bank on if it will honor CD rates to maturity. Here's the Q&A on this issue:
All interest on insured deposits accrued through Friday, January 30, will be paid at your same rate. CenterState Bank of Florida will be reviewing rates and will provide further information soon.

If you deposited funds through a broker, the interest will accrue and be paid through Friday, January 30.

Bankrate and BauerFinancial were on target with the ratings for safety and soundness. Both gave the bank their lowest ratings.

I had done one post on Ocala National Bank in September 2008 regarding its reward checking account. This is the first closure that I've seen in which the bank had a reward checking account. CenterState Bank doesn't appear to have such an account, so I would guess Ocala National Bank reward checking customers will have their accounts transfered into a standard type of checking account at CenterState Bank. I wonder if there's going to be any complications for reward checking account customers receiving their January bonus-level interest rate.

References:
Thanks to the readers who emailed me news of this closure.


Related Posts

Comments
8 Comments.
Comment #1 by Tsunami Cid (anonymous) posted on
Tsunami Cid
It took almost 7 months (July 25) for the first 6 banks to fail in 2008. In 2009, it only took 30 days. And 2008 was considered a tragic year for the economy.

1
Comment #2 by Sofa King Frustrated (anonymous) posted on
Sofa King Frustrated
It's a bloodbath out there people.

Almost 300,000 job layoffs just this first month of 2009.

And now 6 bank failures.

Do we cry? Panic? Be afraid? Pray?

1
Comment #3 by Anonymous posted on
Anonymous
These bank closures, and the ones forthcoming, are a cleansing process. Eventually, our banks will be stronger as a result.

1
Comment #4 by Kitty (anonymous) posted on
Kitty
We have 2 CDs remaining at Ocala Natl. for a total of $125K, so we're covered for FDIC. The interest rates on them however is/was 5.35% and one doesn't mature until 11-2011. I'd like to see them honor that rate since we're retired and use some of that money for income...but I guess we'll find out soon enough which way it goes.

1
Comment #5 by Walter (anonymous) posted on
Walter
No way, Kitty, the new bank will honor such a high rate.

The new bank will allow you to remove your money.

1
Comment #6 by Anonymous posted on
Anonymous
The financial paper said that the recession started in December 2007. So how come gas prices shot up so high in the middle of 2008? Demand was NOT the cause. In fact energy demand had increased, but not high enough to justify the spike in prices. Looks to me that things were humming along in 2005 and 2006 and as investors started to look for higher yields, things were starting to slow down as the Fed slowing increased rates. Then the whole thing imploded as the higher rates took their toll. The Fed tried to reverse course, but like the Titanic, it was too late.

1
Comment #7 by Anonymous posted on
Anonymous
The Fed isn't totally responsible, but they did create their own bubble. The Fed held the interest rates artificially low for way too long. People got too accustom to those extremely low rates and the economy couldn't cope with higher rates when the Fed finally started raising them to a more reallistic level.

1
Comment #8 by Anonymous posted on
Anonymous
The rates went down to historic lows back in 2003 when the Fed was trying to avert a recession that started in 2001 following the tech bust and the 9/11 attack. Then rates started to creep upward followed by the crisis. Now rates are approaching levels seen back in 2003, but the recession could not be avoided, it was only postponed. Mortgage and savings rates and the inflation rate was much higher back in the early 1980's, but I never recalled hearing about any foreclosure crisis at that time. The one difference that I do notice at this time is that real estate was played as if they were stocks and of course, hardly anyone invested in mortgage securities.

1