Dedicated to Deposits: Deals, Data, and Discussion

Six Banks Failed Today - Yearly Total Is Now 15

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The trend of an increasing number of Friday bank failures has continued this week with 6 closures. Last Friday, 5 were closed, and 3 were closed a week before that. The total number of bank failures for this year is now 15. If we average 15 closures a month, that'll be 180 closures by the end of the year. That's 40 more than in 2009.

Two of the banks closed had assets over $1 billion. These were Community Bank and Trust in Georgia and First Regional Bank in California. The total esimated cost of the 6 closures to the FDIC's Deposit Insurance Fund was $1.86 billion.

All of today's six closures were typical. The FDIC was able to find buyers for all six, and the acquiring banks agreed to assume all regular deposits, even those above the FDIC limit. And for the typical downside, the FDIC reports that all six acquiring banks may decide not to honor existing CD rates from the failed banks. If rates are changed, the depositors will have the right to make a penalty-free early withdrawal.

Refer to the section below for the summaries of the closures. Credit goes to this Unofficial Problem Bank List from Calculated Risk. The table in that post points to the last enforcement action for each bank. I used this to find the enforcement actions that had been issued against these failed banks.

Banks are not the only financial institutions that are on a problem list. The NCUA just released its share insurance fund report that covers 2009. Here's an excerpt which shows that many credit unions are not too healthy:

With a net increase of 80 institutions during 2009, there were 351 problem code credit unions at year-end 2009, with shares of $41.6 billion representing 5.82 percent of total insured shares. In comparison, 271 problem code credit unions held shares of $16.3 billion representing 2.70 of total shares at year-end 2008.

Posing additional concern to NCUA, currently there are 1,668 code 3 credit unions, an increase of 134 from year-end 2008. These institutions represent $98.6 billion, or 13.67 percent of total insured shares. Currently, nearly 20 percent of insured shares are held in troubled or stressed credit unions.

Below is a summary of today's bank failures:

10th Bank Failure of 2010 (1st in GA)

  • FDIC Press Release
  • Closed Bank: First National Bank of Georgia, Carrollton, GA
  • Size: 11 branches, $832.6 million in assets, $757.9 million in deposits
  • Possible Uninsured Deposits: All deposits transferred except some brokered deposits
  • Acquiring Bank: Community & Southern Bank, Carrollton, Georgia, a newly chartered institution
  • Rate Changes: Community and Southern Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $260.4 million
  • Enforcement Action: OCC 11/12/08 formal agreement
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

11th Bank Failure of 2010 (2nd in FL)

  • FDIC Press Release
  • Closed Bank: Florida Community Bank, Immokalee, FL
  • Size: 11 branches, $875.5 million in assets, $795.5 million in deposits
  • Possible Uninsured Deposits: All deposits transferred except some brokered deposits
  • Acquiring Bank: Premier American Bank, N.A., Miami, FL
  • Rate Changes: Premier American Bank, N.A. will review rates
  • Estimated Cost to Deposit Insurance Fund: $352.6 million
  • Enforcement Action: FDIC 2/19/09 C&D Order (media reports via CR)
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

12th Bank Failure of 2010 (2nd in MN)

  • FDIC Press Release
  • Closed Bank: Marshall Bank, N.A., Hallock, MN
  • Size: 3 branches, $59.9 in assets, $54.7 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: United Valley Bank, Cavalier, ND
  • Rate Changes: United Valley Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $4.1 million
  • Enforcement Action: OCC 9/12/09 Prompt Corrective Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

13th Bank Failure of 2010 (2nd in GA)

  • FDIC Press Release
  • Closed Bank: Community Bank and Trust, Cornelia, GA
  • Size: 36 branches, $1.21 billion in assets, $1.11 billion in deposits
  • Possible Uninsured Deposits: All deposits transferred except some brokered deposits
  • Acquiring Bank: SCBT, N.A., Orangeburg, SC
  • Rate Changes: SCBT N.A. will review rates
  • Estimated Cost to Deposit Insurance Fund: $354.5 million
  • Enforcement Action: FDIC 5/1/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

14th Bank Failure of 2010 (1st in CA)

  • FDIC Press Release
  • Closed Bank: First Regional Bank, Los Angeles, CA
  • Size: 8 branches, $2.18 billion in assets, $1.87 billion in deposits
  • Possible Uninsured Deposits: All deposits transferred except some brokered deposits
  • Acquiring Bank: First-Citizens Bank & Trust Company, NC
  • Rate Changes: First-Citizens Bank & Trust Company will review rates
  • Estimated Cost to Deposit Insurance Fund: $825.5 million
  • Enforcement Action: FDIC 2/23/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

15th Bank Failure of 2010 (3rd or WA)

  • FDIC Press Release
  • Closed Bank: American Marine Bank, Bainbridge Island, WA
  • Size: 11 branches, $373.2 million in assets, $308.5 million in deposits
  • Possible Uninsured Deposits: All deposits transferred except some brokered deposits
  • Acquiring Bank: Columbia State Bank, Tacoma, WA
  • Rate Changes: Columbia State Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $58.9 million
  • Enforcement Action: FDIC 11/04/09 Consent Order
  • 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
6 Comments.
Comment #1 by Anonymous posted on
Anonymous
Coulee bank just reduced rates on reward checking accts, down to 3.33 % apy. Now getting to the point where its hardly worth it. Hopefully these banks will raise them back up when rates go up.

1
Comment #2 by Anonymous posted on
Anonymous
Some of the banks that were closed are in better shape then the big banks if you look at the assets to debt ratios. I think it is a conspiracy by FDIC to cut down on competition and keep the interest rates low.  If FDIC leave the small banks alone, I'm sure they will survive. There is something illogical about FDIC and the FEDs actions lately. I think the created crises was amplified to justify low interest rates that the FEDs is pandering on us. Since the rates can not go lower then 0%, only way to keep control on the rates is to kill the competition and not allow the higher rates paid by the smaller banks.

4
Comment #3 by Anonymous posted on
Anonymous
.

 

Hmm ... I see a little bit of curious data in here.  Last friday one of failed banks (or was it two) was acquired by a newly chartered bank with very similar name.  This friday also one of the failed banks (Community & Southern Bank) was acquired by a newly chartered bank with similar name!

 

Wonder what''s up with that?



.

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Comment #6 by GBJS (anonymous) posted on
GBJS
ALL THIS TALK OF CONSPIRACY SOUNDS LIKE PARANORIA IS RUNNING WILD  IS JOE MCARTHY BACK ? INVEST IN QUALITY BONDS TAHT ARE PAYING 5 PERCENT OR BETTER

-6
Comment #7 by Anonymous posted on
Anonymous
>Some of the banks that were closed are in better shape then the big banks
>if you look at the assets to debt ratios.

Luckily, since "assets to debt ratios" aren't the only way to determine whether a bank is sound or not, this doesn't mean jack. The *quality* of the assets is much more important.

(Incidentally, I have found all sorts of hilarious theories about "why banks are closed" from the commentators on this blog. One guy a while back thought that the banks were being closed because their assets exceeded their deposits! So the poster of this theory shouldn't feel too bad - apparently a lot of people don't know how to analyze a bank!)

1
Comment #8 by Jack Mosey (anonymous) posted on
Jack Mosey
 I just opened a coulee account. dang. 

Is there any way to get up to date credit union ratings, such as the ones discussed in this blog entry?   I see most of the data at the ncua is quite old.

 

3