There were signs that the end was near for Irwin when it was reported on Wednesday of Irwin Financial Corp's admission that it had "no realistic prospect" of boosting its capital to levels demanded by a regulatory cease and desist order.
The FDIC arranged for First Financial Bank to assume all of the deposits of both Irwin Union banks. All deposits were transferred even those above the FDIC limit. So no depositors will lose any money. This has been typical for this year's bank failures. The only worry for depositors has been the assuming bank cutting rates. The FDIC is rarely helpful in describing the rate decisions by the assuming banks. In the FDIC's Q&A, they typically say that the assuming bank will be reviewing rates and will contact the depositors on any rate changes.
Update 9/19/09: When I wrote this post last night, I had noticed a welcome letter at First Financial Bank for Irwin Union Bank customers. Without carefully reading this, I had thought this was in relationship to Friday's bank failure. It was actually just related to last month's sale of three of Irwin Union branches. In the letter First Financial Bank had stated that there will be no changes to CD rates and terms through to maturity. Unfortunately, this doesn't apply to Friday's closure, and Irwin Union Bank customers will have to wait to see what First Financial Bank decides in terms of existing CDs.
Update 9/26/09: First Financial has released a letter to Irwin Union Bank depositors in which they announced how existing Irwin Union CDs will change:
If your certificates of deposit currently has a rate greater than 1.50%, it will be reduced, effective September 24, 2009, to 1.50%/1.51% annual percentage yield until its maturity
I reported on several Irwin Union CD promotions in the last year. One was a 5.05% 25-month CD last October, so hopefully, First Financial will honor those CD rates to maturity. In a June 2009 promotion Irwin Union was offering a $300 gift along with a competitive 11-month CD. I hope everyone who did this promotion received the gift. In past bank failures the assuming banks didn't honor bonuses that had not been paid out by the failed bank.
Depositors of the former Corus Bank (failed last Friday) had first-hand experience of having rates cut after a bank closure. I reported on Monday of MB Financial's plans on closing Corus Bank CDs and re-pricing Corus money market account rates. Readers have reported that their Corus Bank money market rates were being slashed down to 0.05%.
Below is a summary of today's bank failures:
93rd Bank Failure of 2009 (1st in IN)
- FDIC Press Release
- Closed Bank: Irwin Union Bank and Trust Company, Columbus, IN
- Size: 18 offices in IN, UT, MI & NV, $2.7 billion in assets, $2.1 billion in deposits
- Possible Uninsured Deposits: All deposits transferred
- Acquiring Bank: First Financial Bank, N.A., Hamilton, OH
- Rate Changes: First Financial Bank, N.A. will review rates
- Estimated Cost to Deposit Insurance Fund: $850 million (for both Irwin Union banks)
- Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com
- FDIC Press Release
- Closed Bank: Irwin Union Bank, F.S.B., Louisville, KY
- Size: 9 offices in AZ, CA, IN, KY, NV, NM & MO, $493 million in assets, $441 million in deposits
- Possible Uninsured Deposits: All deposits transferred
- Acquiring Bank: First Financial Bank, N.A., Hamilton, OH
- Rate Changes: First Financial Bank, N.A. will review rates
- Estimated Cost to Deposit Insurance Fund: $850 million (for both Irwin Union banks)
- Financial Ratings: 1 star (troubled) at BauerFinancial, 2 stars (below peer group) at Bankrate.com
