Dedicated to Deposits: Deals, Data, and Discussion

Three Banks and Two Credit Unions Failed This Week

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Three banks failed today. It has been three weeks since there has been 3 or more bank failures on a Friday. All 3 banks were relatively small. One had around $500 million in assets. The other two were tiny with well under $100 million in assets. Total cost to the Deposit Insurance Fund was just under $300 million which is fairly small compared to the losses in previous weeks. Some had speculated that the FDIC may have slowed the closures until the assessment money from the banks start coming in to replenish the DIF.

All of the three closures today were typical. The FDIC was able to find buyers for all three, and the buyers agreed to assume all deposits, even those above the FDIC limit. The main concern for depositors will be if the acquiring banks decide to cut rates on the existing CDs.

The Huntington National Bank assumed all deposits of Warren Bank in Michigan. Huntington has already posted info on its website about the closure including the CD rate changes. I'm sorry to see Huntington cut rates on existing Warren Bank CDs. However, I'm happy to see them being prompt and open in their decision. Banks like MB Financial should learn from this (see post). As is required, Huntington is letting these CD customers make penalty free early withdrawals. Customers have the option to close out their CDs until November 2, 2009 and withdraw their funds without penalty.

Credit Union Liquidations

Credit union failures are starting to pick up. There were two credit union liquidations last week and two this week. The two credit unions that were liquidated this week include:
  • Members’ Own Federal Credit Union of Victorville, CA (NCUA PR)
  • West Texas Credit Union, El Paso, TX (NCUA PR)
This makes 10 credit union liquidations for 2009. These two failed credit unions weren't large, but they weren't tiny. Both had around $80 million in assets. The credit union liquidations are looking more like the FDIC bank failures. For both of these liquidations, the NCUA was able to find another credit union to purchase and assume the failed credit union. It appears that no deposits were lost even those above the NCUA insurance limit. Unlike the FDIC, the NCUA isn't clear about this issue in its press releases.

Below is a summary of today's bank failures:

96th Bank Failure of 2009 (2nd in MI)
  • FDIC Press Release, MI Regulators Press Release
  • Closed Bank: Warren Bank, Warren, MI
  • Size: 6 branches, $538 million in assets, $501 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, except some brokered deposits
  • Acquiring Bank: The Huntington National Bank, Columbus, OH
  • Rate Changes: Huntington has posted new CD rates
  • Estimated Cost to Deposit Insurance Fund: $275 million
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial
97th Bank Failure of 2009 (4th in MN)
  • FDIC Press Release
  • Closed Bank: Jennings State Bank, Spring Grove, MN
  • Size: 2 branches, $56.3 million in assets, $52.4 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: Central Bank, Stillwater, MN
  • Rate Changes: Central Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $11.7 million
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial
98th Bank Failure of 2009 (3rd in CO)
  • FDIC Press Release, OCC Press Release
  • Closed Bank: Southern Colorado National Bank, Pueblo, CO
  • Size: 2 branches, $39.5 million in assets, $31.9 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: Legacy Bank, Wiley, CO
  • Rate Changes: Legacy Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $6.6 million
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial
Bankrate's rating are based on 3/31/09 data. BauerFinancial's ratings are based on 6/30/09 data.

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