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Three Banks Failed Today - FDIC Wasn't Able To Find a Buyer for One

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There were three bank failures today. That brings the total for the year to four. The first two that failed were small. One was in Illinois and the other in Minnesota. The FDIC was able to find buyers who agreed to assume all deposits of these two failed banks.

The third bank to fail was Barnes Banking Company in Utah. Unlike the first two, the FDIC couldn't find a buyer. It must have been in bad shape. With no buyer, the FDIC is shutting down the bank, and it's mailing checks for the insured deposits of CDs and IRAs. For those with checking and savings accounts, the accounts won't be immediately closed. The FDIC has set up a temporary bank that will give depositors time to find another bank. The temporary bank is scheduled to remain open until 2/12/2010.

Since there was no buyer, depositors will lose their uninsured deposits. Fortunately, the vast majority of deposits are insured. According to the FDIC, there's only $100,000 in deposits that are potentially uninsured. That's very small when you consider that the total deposits were $786.5 million.

One new piece of information that I'm including in my bank failure summaries this year is the last enforcement action item the bank received from its regulator. I'm using the unofficial problem bank list at Calculated Risk Blog to find these. The intent of including this along with the latest bank ratings is to see how well this information can be used to predict a bank failure. Most banks that have failed in the last year had the lowest ratings. Also, most had some enforcement action issued against them. There was one exception of this today. I couldn't find any enforcement action against the Illinois bank (Town Community Bank and Trust).

Below is a summary of today's bank failures:

2nd Bank Failure of 2010 (1st in IL)

  • FDIC Press Release
  • Closed Bank: Town Community Bank and Trust, Antioch, IL
  • Size: 1 branch, $69.6 million in assets, $67.4 million in deposits
  • Possible Uninsured Deposits: All deposits transferred except some brokered deposits
  • Acquiring Bank: First American Bank, Elk Grove Village, IL
  • Rate Changes: First American Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $17.8 million
  • Enforcement Action: None Found
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

3rd Bank Failure of 2010 (1st in MN)

  • FDIC Press Release
  • Closed Bank: St. Stephen State Bank, St. Stephen, MN
  • Size: 2 branches, $24.7 million in assets, $23.4 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: First State Bank of St. Joseph, St. Joseph, MN
  • Rate Changes: First State Bank of St. Joseph will review rates
  • Estimated Cost to Deposit Insurance Fund: $7.2 million
  • Enforcement Action: Operated under a FDIC C&D Order since 7/14/2009
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

4th Bank Failure of 2010 (1st in UT)

  • FDIC Press Release
  • Closed Bank: Barnes Banking Company, Kaysville, UT
  • Size: 10 branches, $827.8 million in assets, $786.5 million in deposits
  • Possible Uninsured Deposits: $100,000
  • Acquiring Bank: None
  • Rate Changes: CDs and IRAs are being closed and checks mailed
  • Estimated Cost to Deposit Insurance Fund: $271.3 million
  • Enforcement Action: Operated under a Federal Reserve Written Agreement since 5/19/2009
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

The above BauerFinancial rating is based on 9/30/09 data and the rating from Bankrate is based on 6/30/09 data.

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