Dedicated to Deposits: Deals, Data, and Discussion

18th, 19th & 20th Bank Failures of 2009, Plus Two Credit Unions Placed into Conservatorship

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Three banks failed today bringing the 2009 total to 20. The three failed banks were FirstCity Bank in Georgia, Colorado National Bank in Colorado and TeamBank in Kansas. Typically, the FDIC is able to find another bank to take over the operations of the failed bank. However, the FDIC was unable to find a buyer for FirstCity Bank. Consequently, the bank is being shutdown, and the FDIC will be mailing checks to all depositors. Here's how the FDIC describes this in FAQ #13:
All interest on insured deposits accrued through Friday, March 20, 2009, will be paid at your same rate. This will be included in the check you will receive from the FDIC within one week of the closing.

There's going to be more delay for brokered deposits. According to FAQ #6:
Brokered deposits will be held by the FDIC, and those insured deposits will be paid off when the insurance determination is complete.

Depositors with balances over $250,000 may also see a delay. According to FAQ #1:
If you have more than $250,000 in your interest-bearing account, or if the total of your related interest-bearing accounts exceeds $250,000, your accounts may require review by an FDIC Claim Agent.

For the other two failed banks, the FDIC was able to find banks to take over the operations of the failed banks, and these banks agreed to assume all deposits of the failed banks including deposits over the FDIC limits. For depositors with CDs, the acquiring banks may decide to change the rates and/or terms. Depositors will be allowed to withdraw funds without an early withdrawal penalty.

Two Credit Unions Seized

The NCUA also made news today with the seizing of two large corporate credit unions, US Central Corporate FCU and Western Corporate FCU. The NCUA placed both into conservatorship which means regulators will be taking over management. It's important to note these corporate credit unions don't directly serve the general public. They provide products and services to the credit union system. Both of these corporate credit unions had big losses on their mortgage related assets. The NCUA is estimating the cost to the insurance fund will be $5.9 billion. For more details, refer to this WSJ article.

Here's a summary of the three bank failures:

18th Bank Failure of 2009 in Georgia
  • FDIC Press Release
  • Closed Bank: FirstCity Bank
  • Location: Stockbridge, GA
  • Size: 5 branches, $297 million assets, $278 million deposits
  • Possible Uninsured Deposits: $778,000
  • Acquiring Bank: None - checks being mailed to depositors
  • Estimated Cost to Deposit Insurance Fund: $100 million
  • Financial Ratings: 0 star at BauerFinancial, 1 star (lowest) at Bankrate.com

19th Bank Failure of 2009 in Colorado
  • FDIC Press Release
  • Closed Bank: Colorado National Bank
  • Location: Colorado Springs, CO
  • Size: 4 branches, $123.5 million assets, $82.7 million deposits
  • Possible Uninsured Deposits: ALL deposits Transferred
  • Acquiring Bank: Herring Bank, Amarillo, TX
  • Estimated Cost to Deposit Insurance Fund: $9 million
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com

20th Bank Failure of 2009 in Kansas
  • FDIC Press Release
  • Closed Bank: Teambank, N.A.
  • Location: Paola, Kansas
  • Size: 17 branches, $669.8 million assets, $492.8 million deposits
  • Possible Uninsured Deposits: ALL deposits Transferred
  • Acquiring Bank: Great Southern Bank, Springfield, MO
  • Estimated Cost to Deposit Insurance Fund: $98 million
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com
Note, Teambank and Colorado National Bank were sister banks under the same bank holding company.

References:
Thanks to the readers who emailed me news of these closures.

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Comments
5 comments.
Comment #1 by Anonymous posted on
Anonymous
I'm shocked to find no earlier comments. I am "late to the party" on this. Just heard the news on the radio.

And of course the pivotal news here for most of us is takeover of the two corporate credit unions. The banks are small and unimportant.

The credit unions where so many of use have invested gave our money they could not place locally to these kinds of "corporate" credit unions. Whereupon our money, or far too much of it, went straight into toxic assets.

I'm not suggesting we will lose money invested beneath NCUA protection. But all the letters I have received from MANY various credit unions proclaimed they were not like banks and were not putting my money into harm's way. I now loudly cry "BOGUS" on those various messages. The local credit unions were behaving, on the whole, responsibly as regards their local lending. But they were entrusting other excess monies to corporate credit unions where many billions were lost. I suspect we have not seen the end of this debacle. And I believe it will negatively impact credit union interest rates starting very soon.

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Comment #2 by Anonymous posted on
Anonymous
I don't understand why you are "shocked" when you found no comments. Most of us know all this has been predicted and anticipated. We just don't know which particular banks and CUs will fail in the future. What more can be said.

As far as the banks and CUs that failed being small and unimportant. It may be unimportant to you, but not to the depositors of those institutions, I'm sure.

And it's the sorry state of the economy more than anything else that will negatively impact credit union interest rates payed on savings and CD accounts. The rates have been falling for some time time and will continue to do so as long as the enconomic outlook is so gloomy.

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Comment #3 by Anonymous posted on
Anonymous
3:24 your remarks show very little understanding of what I wrote. Do you even know what a corporate credit union is? And do you understand what purpose they serve?

First learn. Then post.

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Comment #4 by Anonymous posted on
Anonymous
All financial institutions are in business to do one thing only- make money. When a new product appears that can earn you some bucks and when many others are capitalizing on it, you also join in. When a big bunch of organizations are involved and then all of a sudden, this new product turns "bad", then a whole bunch of companies become affected. Credit unions have been trying to distance themselves from the toxic investments made by commercial and investment banks. Apparently, these corporate credit unions did not do so.

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Comment #5 by Anonymous posted on
Anonymous
This is what a local credit union says about how they are different than regular banks.

"We take being the "un-bank" very seriously. Banks exist to make money for their stockholders. It’s what they do. And they’re good at it.

We’re a different animal altogether. A Credit Union exists to help its members (that’s you) get the best deals on loans and savings. That’s what we do. And we’re very good at it."

Believe it or not?

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