Dedicated to Deposits: Deals, Data, and Discussion

Five Bank Failures Including Charter Bank in New Mexico

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Each new Friday this year we have been seeing higher number of bank failures. There were five banks that failed on this Friday, and they stretched across all of the four major time zones. For all five cases, the FDIC was able to find buyers which agreed to assume all deposits of the failed banks.

One of the failed banks is Charter Bank in Santa Fe, New Mexico. Many readers had this bank's reward checking account, Turbo Checking, which was available nationwide. The rate had remained above 4% since 2007. However, this changed last November when Charter slashed the rate. This proved to be a clue about the bank's future.

One interesting aspect of Charter Bank's closure and the closure of one in Miami, Florida (Premier American Bank) was that the buyers are newly-chartered banks with very similar names as the failed banks. Perhaps by keeping the same names, the buyers are hoping that fewer people will notice the closures and move their deposits. CD holders will notice if the buyers decide not to honor existing CD rates. In all cases the FDIC is saying the acquiring banks will be reviewing rates and notifying depositors if interest rates are reduced. As always, CD holders will be free to make a penalty-free early withdrawal if rates do change.

Calculated Risk Blog has an updated unofficial list of problem banks. I've used this list to note the public enforcement actions that were issued against these failed banks.

All of the banks had the lowest ratings at both BauerFinancial and Bankrate.com. Both ratings are now based on 9/30/09 data. Bankrate.com finally updated their ratings today with the 9/30/09 data. It has been taking them about 6 weeks longer than BauerFinancial to update their ratings based on the latest quarterly FDIC data.

Below is a summary of today's bank failures:

5th Bank Failure of 2010 (1st in FL)

  • FDIC Press Release
  • Closed Bank: Premier American Bank, Miami FL
  • Size: 4 branches, $350.9 in assets, $326.3 million in deposits
  • Possible Uninsured Deposits: All deposits transferred except some brokered deposits
  • Acquiring Bank: Premier American Bank, N.A., a newly-chartered national institution
  • Rate Changes: Premier American Bank, N.A. will review rates
  • Estimated Cost to Deposit Insurance Fund: $85 million
  • Enforcement Action: FDIC 5/18/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

6th Bank Failure of 2010 (1st in MO)

  • FDIC Press Release
  • Closed Bank: Bank of Leeton, Leeton, MO
  • Size: 1 branch, $20.1 million in assets, $20.4 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: Sunflower Bank, N.A., Salina, KS
  • Rate Changes: Sunflower Bank, N.A. will review rates
  • Estimated Cost to Deposit Insurance Fund: $8.1 million
  • Enforcement Action: FDIC 2/27/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

7th Bank Failure of 2010 (1st in NM)

  • FDIC Press Release
  • Closed Bank: Charter Bank, Santa Fe, NM
  • Size: 8 branches, $1.2 billion in assets, $851.5 million in deposits
  • Possible Uninsured Deposits: All deposits transferred except some brokered deposits
  • Acquiring Bank: Charter Bank, Albuquerque, NM, a newly-chartered federal savings bank
  • Rate Changes: Charter Bank, Albuquerque, NM will review rates
  • Estimated Cost to Deposit Insurance Fund: $201.9 million
  • Enforcement Action: OTS 11/20/09 C&D Order and OTS 1/20/10 Prompt Corrective Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

8th Bank Failure of 2010 (2nd in WA)

  • FDIC Press Release
  • Closed Bank: Evergreen Bank, Seattle, WA
  • Size: 7 branches, $488.5 million in assets, $439.4 million in deposits
  • Possible Uninsured Deposits: All deposits transferred except some brokered deposits
  • Acquiring Bank: Umpqua Bank, Roseburg, OR
  • Rate Changes: Umpqua Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $64.2 million
  • Enforcement Action: FDIC 10/23/09 Consent Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

9th Bank Failure of 2010 (1st or OR)

  • FDIC Press Release
  • Closed Bank: Columbia River Bank, The Dalles, OR
  • Size: 21 branches, $1.1 billion in assets, $1.0 billion in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: Columbia State Bank, Tacoma, WA
  • Rate Changes: Columbia State Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $172.5 million
  • Enforcement Action: None
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

The above BauerFinancial and Bankrate ratings are based on 9/30/09 data.

References:



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Comments
4 Comments.


Comment #2 by KenBDG posted on
KenBDG
My prediction is much higher (300). I hope I'm wrong, and there are far fewer. I reviewed what we may expect in 2010 in my bank failure review of 2009 post

.

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Comment #3 by Anonymous posted on
Anonymous
Thank you for the reminder about the unofficial list of problem banks blog.

This easy to browse collection of regulatory notices should be required reading for all. 

Most people consider local banks to be conservatively managed and would be surprised and appalled that their local bank was so poorly managed and on this list.

I'd like to hear comments from bank employees on how they are informed of bank regulatory notices and the impact to their everyday work at the bank.

 

 

 

 

 

 





 

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Comment #4 by Gaelicwench posted on
Gaelicwench
I used to bank at Charter Bank in NM and used their Turbo Checking account. At the time, they were offering 6.01% with the usual round of requirements. I long ago stopped chasing rates; that became like a dog chasing its tail.

For me, the best and safest bet is to stay with my local credit union and establish a good relationship with them. "Hubs" and I have a joint checking and savings account there, altho I admit I have opened a personal checking at a local community bank as well; I deposit my paper paychecks (where I work, they don't offer direct deposit because of the high turnover rate)into that account to pay my health insurance and co-pays. It's all good.

Keep it local and help out your community.

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Comment #5 by Sofaking Nuts (anonymous) posted on
Sofaking Nuts
My wife and I previously had accounts at Charter and used their Turbo checking.  We only stayed for a few months - a month after we joined they slashed their rate from 4 to 1.25%.  We left shortly after that.  We were never pleased with the bank anyway - very slow and antiquated services.

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