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AmTrust Bank and Five Other Banks Are Shut Down by Regulators

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This was a busy Friday for the FDIC with six bank closures including AmTrust Bank which was the fourth largest bank to fail this year. There were signs the failure was near for AmTrust Bank. The bank's parent filed for bankruptcy earlier this week, and the WSJ reported that the FDIC had been conducting an auction for AmTrust Bank. All deposits were assumed by New York Community Bank so no one should have lost any money. The only concern for depositors is whether New York Community Bank will honor AmTrust CD rates to maturity. There may be quite a few depositors with AmTrust CDs that are still earning over 5%. Back in 2006 AmTrust's internet bank had been offering 5-year CDs with a 5.46% APY. If New York Community Bank chooses to reduce these CD rates at least depositors are allowed a penalty-free early withdrawal.

Update 12/08/09: According to cleveland.com, Ilene Angarola, executive vice president at NYCB, stated that "CD rates will not be changed until such time as they mature or roll over."

In addition to AmTrust Bank's closure, three Georgia banks failed. There was also one closure in Illinois and one in Virginia. All of these closures were similar in that the FDIC was able to find buyers which assumed all deposits. With 23 failures, Georgia continues to lead the nation with the most bank failures in 2009.

Below is a summary of today's bank failures:

125th Bank Failure of 2009 (22nd in GA)
  • FDIC Press Release
  • Closed Bank: The Buckhead Community Bank, Atlanta, GA
  • Size: 6 branches, $874 million in assets, $838 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, except some brokered deposits
  • Acquiring Bank: State Bank and Trust Company, Macon, GA
  • Rate Changes: State Bank and Trust Company will review rates
  • Estimated Cost to Deposit Insurance Fund: $241.4 million
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial
  • Update 12/14/09: AJC article reviews conditions at Buckhead before the closure: "Buckhead Community, a once high-flying banker to the city’s wealthy elite, spent its final months of life in a desperate attempt to save itself."
126th Bank Failure of 2009 (23rd in GA)
  • FDIC Press Release
  • Closed Bank: First Security National Bank, Norcross, GA
  • Size: 4 branches, $128 million in assets, $123 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, except some brokered deposits
  • Acquiring Bank: State Bank and Trust Company, Macon, GA
  • Rate Changes: State Bank and Trust Company will review rates
  • Estimated Cost to Deposit Insurance Fund: $30.1 million
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial
127th Bank Failure of 2009 (24th in GA)
  • FDIC Press Release
  • Closed Bank: The Tattnall Bank, Reidsville, GA
  • Size: 2 branches, $49.6 million in assets, $47.3 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, excluding some brokered deposits
  • Acquiring Bank: HeritageBank of the South, Albany, GA
  • Rate Changes: HeritageBank of the South will review rates
  • Estimated Cost to Deposit Insurance Fund: $13.9 million
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial
128th Bank Failure of 2009 (2nd in OH)
  • FDIC Press Release
  • Closed Bank: AmTrust Bank, Cleveland, OH
  • Size: 66 branches, $12.0 billion in assets, $8.0 billion in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: New York Community Bank, Westbury, NY
  • Rate Changes: New York Community Bank will review rates Update 12/17/09: It has been reported that NYCB is honoring AmTrust CD rates to maturity (see BCC post)
  • Estimated Cost to Deposit Insurance Fund: $2.0 billion
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial
129th Bank Failure of 2009 (20th in IL)
  • FDIC Press Release
  • Closed Bank: Benchmark Bank, Aurora, IL
  • Size: branches, $170.0 million in assets, $181.0 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, except some brokered deposits
  • Acquiring Bank: MB Financial Bank, N.A., Chicago IL
  • Rate Changes: MB Financial Bank, N.A. will review rates
  • Estimated Cost to Deposit Insurance Fund: $64 million
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial
130th Bank Failure of 2009 (1st in VA)
  • FDIC Press Release
  • Closed Bank: Greater Atlantic Bank, Reston, VA
  • Size: 5 branches, $203.0 million in assets, $179.0 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: Sonabank, McLean, VA
  • Rate Changes: Sonabank will review rates
  • Estimated Cost to Deposit Insurance Fund: $35 million
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial
Bankrate's and BauerFinancial's ratings are based on 6/30/09 data.

References:


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Comments
7 Comments.
Comment #1 by Rick (anonymous) posted on
Rick
I have an E-Savings account with AmTrust Bank, or did have :). When the savings rate dropped I pulled all my money out except for a few dollars.

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Comment #2 by Anonymous posted on
Anonymous
New York Community Bank is a local bank where I am and has a good reputation.

Amtrust had a good reputation for high rate CD's at the branches, but for the online division was very corrupt playing by a seperate set of rules.

When I saw NY Community Bank was taking them over, I think its a good move because of the ties back to New York and Florida.

Joseph R. Ficalora has been with Michael Stoiler on the CUNY Channel and I vividly remember the bank as a kid when it was Roslyn Savings Bank and then it converted into a shareholder based bank.

Family has lots of deposits with New York Community and had (I don't know if they still have) with AmTrust in the Florida branches. My problem was with the Online Direct division where they ****ed up on an ACH transaction, and wound up charging me fees on the account which they wound up reversing which were inappropriately charged. To this day I believe they were pulling fraud with me, but have been unable to prove it since they corrected it and then I finally pulled out all my funds from the account.

This provides a good resolution for AmTrust customers all around. Plus we have a New York Community branch right here as well.

Will I ever use a NY Community based online account? Probably not since I have HSBC, GE Interest Plus, iGOBanking which is being phased out, and American Express Personal Savings and a Capital One account.

If they offered a good deal, I would surely consider it. Seems like they expanded branch structures to include Florida and New York. It made an excellent fit and improves the bank for all customers from Ohio and Florida to New York and all the markets it serves.

Now one can say New York Community Bank is a good bank. It always has been, and its here to stay for good now.

Bank failures are a normal process of the economy and horrible banks will fail. Strong Banks will survive and get stronger.

Case in point: Chase is stronger with the WAMU takeover. Amtrust is stronger as New York Community Bank, Amex Bank is very strong as is Capital One as is Flushing Savings.

All is good and the failed bank list isn't bad. Its essentially a predictable list. I specifically knew when WAMU would fail and I specifically knew Amtrust was horrible and would fail.

But New York Community Bank is here to stay, and this is great news for people who had deposits. Great news all around. The combo of Florida and New York markets is a perfect fit.

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Comment #3 by Anonymous posted on
Anonymous
MyBankingDirect is the online division of New York Community Bank at 1.25% which is more competitive than AmTrustDirect right now but is still a paltry 1.25% so it doesn't look like its online rates are so good.

So while it improves the Bank, New York Community Bank just doesn't have high rate tiers around here with so much competition in tow.

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Comment #4 by Anonymous posted on
Anonymous
We had a nightmare closing an Amtrust Online CD last July. Their stalling and mistakes really bordered on deception. Finally resolved it by phoning a random suburban Cleveland branch which I found on Google and pleading with the manager to intervene. In her words their online department was "an embarrassment".

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Comment #5 by Anonymous posted on
Anonymous
The past AmtrustDirect is officially gone.

New York Community Bank is a old school bank with a horrible website.

They are good at in person banking and do that well and they have old time customers who are technologically illiterate and they have low rates.

They have lost significant market share in my area for local banks and have nothing to offer compared to more tech savvy and higher rate competitors. What they do have is a lot of decent sized branches in a small radius, but I never see any quality offerings anymore from them. Flushing Savings Bank which is also a local bank here was more competititive with Igobanking.com than MyBankingDirect was with New York Community Bank.

As of today New York Community Bank is an old clunky and inefficient bank for online users. They are an old style person to person bank and are not in the times when it comes to new technology and have lost marketshare at a rapid rate from its local branches in town but some old time customers have never left the branches.

So what does this do? Just gives them a wider reach and more low cost deposits.

Could be good for dividend of the bank and long term profit margins, but for depositors who have local branches, I wouldn't be concerned about losing funds, just that they are an old style bank made up of various banks locally assembled into one.

I will say that they have secure safe deposit boxes which are old time, unlike some of the other banks I have seen at least in its older New York Branches.

Its a real old school bank and has every right to exist as competition. The problem is that rates are low and they excel in person to person banking when other banks are more computerized and automated and the new automation at banks such as HSBCDirect works quite well including those cash acceptors and check scanners.

If you want a BIG Bank building with tellers and a fancy old style bank branch with old fashioned multilock safes with separate screening rooms with a community flair and drivethru access at some locations, then New York Community Bank is for you.

I am not sure how loans and mortgage and other products compare, but I think other banks are superior to New York Community Bank at this time for usage for the crowd on here for the most part.

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Comment #6 by Anonymous posted on
Anonymous
From an investment side of the coin:

New York Community Bank combined with Amtrust allows then to retain and add to their deposit base.

A lot of New York'ers have or are moving down to Florida in locations where AmTrust Branches are located. So they get the Florida Market and New York snowbirds and those who are moving away from New York to settle down in Florida.

The two markets and two banks are invariably intertwined and this deal for New York Community was a perfect sweatheart deal that made sense for everyone involved.

The older crowd or less tech savvy crowd who must have an old fashioned bank and isn't as concerned with interest rates or may not have the same competition as others is a perfect fit for AmTrust.

New York Community's current rates are not as good right now but with the AmTrust acquisition of deposits combined with the New York Branch may lead to better deals in the future and if they do exist, I would not hesitate to put money in the bank.

AmTrust was a horribly run bank with a horrible internet division as well but was FDIC insured so all depositors got their funds back and a government assisted deal with AmTrust and the FDIC to New York Community Bank emerged.

My guess is New York Community Bank stock is probably a very good investment right now for the forseeable future since these 2 markets intertwined are core profitable markets and have significant asset bases.

Some banks have the wrong locations and wrong markets. But not these 2. The markets are just unbeatable right now.

Core NYC Metro Core South Florida. A solid bank with great location branches. Stable and excellent quality client base.

When HSBC climbed to the top as the World's Local Bank, it was clear that they also had great locations for a global scale international bank.

With New York Community taking over AmTrust, it is clear that New York Community Bank is much improved and is a top community bank on a larger scale since the local community includes both New York AND Florida which has a lot of the same people and players.

All is good here as far as banking is concerned and this deal is a sweetheart for New York Community Bank. Its not often a bank fails where the complementary benefits just make so much sense of 2 banks to combine.

I had an account with AmtrustDirect I couldn't wait to close out which I did. I don't have any current New York Community accounts though I did in the past have accounts with them.

Personally, for the stock, this looks good. For Depositors, I have no clue if the combined bank will have any significant online presense with any rate offerings that outshine other banks with less overhead and it won't offer the global scale of World Bank's.

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Comment #7 by SaveYurMoney posted on
SaveYurMoney
I was paying my mortgage to AM Trust Bank until November 2010.  Receieved a letter from the FDIC saying that they were actually servicing the loan in AM Trust's place for the past year. Now the mortgage has been transferred to Met Life Home Loans.  It's strange that it took almost a year for this change to take place.

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