Dedicated to Deposits: Deals, Data, and Discussion

9th Bank Failure of 2009: County Bank in California

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Just like last Friday, we had three bank failures today. County Bank was the third bank to be closed today. It was closed by California regulators, and the FDIC was named receiver. Here's the FDIC's press release link, and here's a summary of the closure:
  • Closed Bank: County Bank
  • Location: Merced, CA
  • Size: 39 branches, $1.7 billion assets, $1.3 billion deposits
  • Possible Uninsured Deposits: ALL deposits Transferred
  • Acquiring Bank: Westamerica Bank
  • Cost to Deposit Insurance Fund: $135 million (estimated)
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com
California's bank regulators didn't have much to add in their press release. The extent of this bank's problems was evident in the bank's press release that was issued last Friday:
As a result of the Bank’s cumulative losses, capital position and noncompliance with its regulatory agreements, the Bank’s state and federal banking regulators may take further significant regulatory action.

The stock price for the bank's holding company, Capital Corp of the West, plummeted right after that press release falling from 75 cents to 19 cents.

This closure is very similar to the two earlier ones. It's an All-Deposit Transfer transaction in which the new bank assumes all deposits, including those above the FDIC insurance limits. The new bank also assumes brokered deposits. However, Westamerica Bank may be changing interest rates. Here's what this FDIC Q&A states:
3. I am a deposit broker or have brokered deposits. What do I do?

As an All-Deposit Transfer transaction, the total of all deposit accounts, including brokered deposits, have been assumed by Westamerica Bank.

Be advised, however, that from and after the date of closing, Westamerica Bank will accrue and pay interest on deposit liabilities at a rate it shall determine; accordingly, Westamerica Bank shall permit depositors, including brokered depositors, impacted by reduced rates to withdraw their deposits without penalty for early withdrawal until you enter into a new deposit agreement with your new bank. Entering into a new deposit agreement can be done by either renewing your CD or making a deposit to, or a withdrawal from, your account.

I had three posts on County Bank last year. Late last year they started offering an online savings account that was available nationwide.

Bankrate and BauerFinancial were again on target with the ratings for safety and soundness. Both gave the bank their lowest ratings. County Bank was also on this Texas ratio list, but the ratio was lower than the ratios of the previous two failed banks.

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

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