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Guaranty Bank in Texas, ebank in Georgia and 2 Other Banks are Closed by Regulators

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The news reports that came out on Wednesday were correct. As the reports predicted, Guaranty Bank in Texas was closed today by federal regulators. BBVA Compass took over the bank and assumed all deposits. With $13 billion in assets it's the second largest bank failure of 2009. Last week's closure of Colonial Bank was the largest, and BankUnited was the third largest. Here's how they compare:
  • Colonial Bank, $25 billion in assets, $2.8 billion cost to DIF
  • Guaranty Bank, $13 billion in assets, $3 billion cost to DIF
  • BankUnited, FSB, $12.8 billion in assets, $4.9 billion cost to DIF
In my previous post I described some of the issues that led to Guaranty's downfall.

Guaranty depositors don't have any reason to worry. All deposits including those above the FDIC limit was assumed by BBVA Compass. The only exceptions are some brokered deposits that the FDIC will pay off directly. In addition, BBVA Compass has stated in its FAQ that they "will honor the rates and terms and conditions on your certificate of deposit. As each certificate of deposit reaches maturity, you will be able to review the variety of rates and terms offered at that time."

In addition to Guaranty Bank, three other banks were closed today. Two were in Georgia and one was in Alabama. For all three closures, the FDIC arranged for other banks to take over the failed banks and to assume all of the banks' deposits including those over the FDIC limit (with the exception of some brokered deposits). Unlike the case of BBVA Compass, the new banks haven't announced if they will honor the existing CD rates.

One of the failed Georgia banks was the internet bank, ebank. In the last three years I've reported on several CD and checking account deals from ebank. Stearns Bank, N.A. took over ebank and assumed all deposits. No decision has been made by Stearns Bank if it'll honor ebank CD rates to maturity. If you have an ebank CD, please leave a comment when Stearns Bank informs you of its decision. One thing I found interesting is that ebank only had $130 million in deposits. Considering that ebank has long offered good deposit deals nationwide over the internet, I'm surprised to see that the total deposits are this low.

ebank update 8/31/09: A reader who had ebank CDs reported receiving a letter from Stearns with its decision on the CD rates. Stearns said they would pay out at the stated rates you opened your ebank account with until September 11th. After then it would change to:
Term           APY
3 month 1.30%
6 month 1.55%
9 month 1.66%
12-24 Month 2.00%
30-60 Month 1.00%
Qwick rate 1.00%

Below is a summary of today's bank failures:

78th Bank Failure of 2009 (17th in GA)
  • FDIC Press Release
  • Closed Bank: ebank, Atlanta, GA
  • Size: 1 office, $143 million in assets, $130 million deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: Stearns Bank, N.A., St. Cloud, MN
  • Rate Changes: Stearns Bank, N.A. will review rates
  • Estimated Cost to Deposit Insurance Fund: $63 million
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com
79th Bank Failure of 2009 (18th in GA)
  • FDIC Press Release
  • Closed Bank: First Coweta, Newnan, GA
  • Size: 4 offices, $167 million in assets, $155 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, except brokered deposits
  • Acquiring Bank: United Bank, Zebulon, GA
  • Rate Changes: United Bank, Zebulon, GA will review rates
  • Estimated Cost to Deposit Insurance Fund: $48 million
  • Financial Ratings: 1 star (troubled) at BauerFinancial, 1 star (lowest) at Bankrate.com
80th Bank Failure of 2009 (2nd in AL)
  • FDIC Press Release
  • Closed Bank: CapitalSouth Bank, Birmingham, AL
  • Size: 10 offices, $617 million in assets, $546 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, except brokered deposits
  • Acquiring Bank: IBERIABANK, Lafayette, LA
  • Rate Changes: IBERIABANK will review rates
  • Estimated Cost to Deposit Insurance Fund: $151 million
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com
81st Bank Failure of 2009 (2nd in TX)
  • FDIC Press Release
  • Closed Bank: Guaranty Bank, Austin, TX
  • Size: 103 branches in TX, 59 branches in CA, $13 billion in assets, $12 billion in deposits
  • Possible Uninsured Deposits: All deposits transferred, except brokered deposits
  • Acquiring Bank: BBVA Compass, Birmingham, AL
  • Rate Changes: BBVA Compass will honor the rates and terms of existing CDs (see BBVA FAQ)
  • Estimated Cost to Deposit Insurance Fund: $3 billion
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com
References:
The above financial ratings are based on 3/31/09 data. Thanks to the readers who emailed me news on these closures.


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Comments
4 Comments.
Comment #1 by Anonymous posted on
Anonymous
Someone made an interesting point about counting the hundreds of branch failures as one bank failure making today's numbers seem less bad than earlier banking problems when there wasn't so much consolidation.

Also, I guess next week (the 25th) we get the FDIC Q2 report, which should be fun. Starting with DIF=$13B minus $9B in estimated losses plus $5.6B in one-time fees plus another $3B in normal fees means not much change in DIF? Or maybe those numbers are way off. It's unclear to me if their $5.6B "one-time" charge happened already in Q2 and will happen again in September, or if it didn't happen yet and was agreed upon in Q2. Also, their estimated costs might not equal their actual costs. Anyway, we'll see.

1
Comment #2 by rate (anonymous) posted on
rate
Besides the real estate market, which was deeply harmed by the crisis, the financial markets also had a lot to suffer. The interest got higher and their activity smaller, some of them being even closed as you said.

1
Comment #3 by rate (anonymous) posted on
rate
Actually, the real estate had to suffer as a consequence of the crisis on the financial market.

1
Comment #4 by nyfinances (anonymous) posted on
nyfinances
Bank closures affected especially the entrepreneurs, who need loans to run their small businesses, because they can't handle their finances that well, at least in the beginning.

1