Dedicated to Deposits: Deals, Data, and Discussion

One New York Bank and Six Georgia Banks Are Closed by Regulators

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Seven banks failed today. The small New York bank, Waterford Village Bank, was the first New York State bank to fail since 2004. The other six banks were in Georgia. This makes a total of 16 banks that have failed in Georgia in 2009. Georgia overtook Illinois which has 11 bank failures for this year.

All six of the Georgia banks were subsidiaries of Security Bank Corporation. So it's more like just one bank. However, each had its own FDIC charter, so they are considered separate banks.

The FDIC was able to find buyers for all of today's failed banks, and the buyers agreed to assume all deposits from the failed banks even those above the FDIC limits. So no depositor will be losing any money. However, CD customers may lose their rate lock. According to the FDIC, the new banks are reviewing rates and will notify customers if they decide to modify rates. CD customers are free to make an early withdrawal without a penalty.

The buyer of the failed Georgia banks is not a typical bank. According to this Atlanta Journal-Constitution article the banks "will be taken over by three veteran Georgia bankers led by Joe Evans, former president and CEO of Flag Financial Corp." The buyer of the failed banks is State Bank and Trust Company, Pinehurst, GA. This is a tiny bank which as of March 31st it only had $36 million in assets, $28 million in deposits and 11 employees. Here's how AJC described this acquisition by Evans and his group:
The transaction is complex and involves the Evans group buying a controlling stake in one of Georgia’s smallest banks, State Bank and Trust Co. of Pinehurst. State Bank, now run by Evans and his team, has acquired all of Security’s $2.4 billion in deposits and most of its $2.8 billion in assets.

The FDIC appears to be trying hard this year to find buyers who agree to assume all deposits. This hasn't always been the case. According to the FDIC, it "has been able to transfer all deposits in about 25% of the failures over the past 15 years." So far this year, over 62% of the failed banks were all-deposit transfers (85.9% if brokered deposits are not considered).

Future Large Bank Failures

News reports have suggested we'll soon be seeing seizures of two large banks. This Bloomberg article reported that Corus Bank may be seized by August 6th. Corus Bank has $7.6 billion in assets. Another Bloomberg article reported on a SEC filing by Texas-based Guaranty Bank. In the filing, the bank said it can’t raise capital demanded by regulators and will probably fail. Guaranty Bank has $14.4 billion in assets.

If these banks do fail, hopefully the FDIC will be able to find buyers who'll assume all deposits. But this may become more difficult for the FDIC as more banks fail this year. So it's best not to assume this streak of all-deposit transfers will continue. Stay below the FDIC limits so you don't have to worry.

Below is a summary of today's bank closures:

58th Bank Failure of 2009 (1st in NY)
  • FDIC Press Release
  • Closed Bank: Waterford Village Bank, Clarence, NY
  • Size: 1 office, $61.4 million in assets, $58 million deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: Evans Bank, N.A., Angola, NY
  • Rate Changes: Evans Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $5.6 million
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com
59th to 64th Bank Failures of 2009 (11th to 16th in GA)
  • FDIC Press Release
  • Common Bank Holding Company of all 6 Failed Banks: Security Bank Corporation, Macon, GA
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: State Bank and Trust Company, Pinehurst, GA
  • Rate Changes: State Bank and Trust Company will review rates
  • Estimated Cost to Deposit Insurance Fund: $807 million
59th Bank Failure of 2009 (11th in GA)
  • Closed Bank: Security Bank of North Fulton, Alpharetta, GA
  • Size: 1 office, $209 million in assets, $191 million deposits
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com

60th Bank Failure of 2009 (12th in GA)
  • Closed Bank: Security Bank of North Metro, Woodstock, GA
  • Size: 1 office, $224 million in assets, $212 million deposits
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com

61st Bank Failure of 2009 (13th in GA)
  • Closed Bank: Security Bank of Houston County, Perry, GA
  • Size: 5 offices, $383 million in assets, $320 million deposits
  • Financial Ratings: 1 star (troubled) at BauerFinancial, 1 star (lowest) at Bankrate.com

62nd Bank Failure of 2009 (14th in GA)
  • Closed Bank: Security Bank of Bibb County, Macon, GA
  • Size: 13 offices, $1.2 billion in assets, $1 billion deposits
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com

63rd Bank Failure of 2009 (15th in GA)
  • Closed Bank: Security Bank of Jones County, Gray, GA
  • Size: 1 office, $453 million in assets, $387 million deposits
  • Financial Ratings: 2 star (problematic) at BauerFinancial, 1 star (lowest) at Bankrate.com

64th Bank Failure of 2009 (16th in GA)
  • Closed Bank: Security Bank of Gwinnett County, Suwanee, GA
  • Size: 1 office, $322 million in assets, $292 million deposits
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com

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


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Comments
3 Comments.
Comment #1 by Jim (anonymous) posted on
Jim
This there some running total of most recently released FDIC fund balance minus recent estimated costs of these new bank failures? I suppose it doesn't work that way as they increase fees, and the Treasury will bail out the FDIC with $500B one of these days anyway, but it would be interesting to know of a web site that tracks how close we are to that day.

1
Comment #3 by Anonymous posted on
Anonymous
Article in the LA Times today points out that Guaranty Bank has many branches in California as well as its 150 tExas branches.

1