Dedicated to Deposits: Deals, Data, and Discussion

Advanta Bank Corp. and 6 Other Banks Failed Today

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This was a busy day for the FDIC with 7 bank failures which brings the total for the year to 37. This was the most closures on one day since December 18, 2009 when 7 banks were closed. The most notable bank failure today was Advanta Bank Corp. which was the subsidiary of Advanta Corp., the bankrupt credit-card issuer.

A couple of years ago Advanta Bank Corp. had offered some very competitive CDs. My last Advanta post was in September 2008 when it was offering a 5.25% 60-month CD. I'm afraid customers who had those CDs will be losing that interest rate. The FDIC wasn't able to find a buyer, and thus the Advanta is being closed and checks of insured deposits will be mailed on Monday.

One interesting thing to note regarding my September 2008 post on Advanta is that it had 4-star ratings at both BauerFinancial and Bankrate.com. At today's closure, the rating at BauerFinancial had fallen to zero, the lowest rating. For some reason, Bankrate.com listed Advanta with a NR label (not rated). This is a good example of why it's important to stay under the FDIC limit regardless of the ratings. It appears the vast majority of Advanta depositors did stay below the FDIC limit. Out of $1.5 billion in deposits, there were only $247,000 of deposits that potentially were over the FDIC limit. That's less than 0.02% of the deposits.

Another sizable closure today was at Appalachian Community Bank in Georgia. It had just over $1 billion in assets. Advanta and Appalachian closures resulted in a cost of more than $1 billion to the FDIC's Deposit Insurance Fund. The other five bank failures only cost the DIF about $227 million.

Advanta's closure was the only one in which the FDIC wasn't able to find a buyer. For the other six closures, the FDIC was able to find buyers who agreed to assume all deposits even those above the FDIC limit.

Credit Union Placed into Conservatorship

There weren't any credit union liquidations this week. However, the NCUA reported late today that it had placed Tracy Federal Credit Union (located in CA) into conservatorship. Here's how the NCUA press release describes the conservatorship:

The decision to conserve a credit union enables the institution to continue normal operations with expert management in place correcting previous service and operational weaknesses

Below is a summary of today's bank failures:

31st Bank Failure of 2010 (1st in OH)

  • FDIC Press Release
  • Closed Bank: American National Bank, Parma, OH
  • Size: 1 branch, $70.3 million in assets, $66.8 million in deposits
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. brokered deposits have been transferred
  • Acquiring Bank: The National Bank and Trust Company, Wilmington, OH
  • Rate Changes: The National Bank and Trust Company will review rates
  • Estimated Cost to Deposit Insurance Fund: $17.1 million
  • Enforcement Action: OCC 9/22/09 Consent Order
  • Financial Ratings: NR (not rated) at Bankrate.com, 0 star (lowest) at BauerFinancial

32nd Bank Failure of 2010 (3rd in GA)

  • FDIC Press Release
  • Closed Bank: Century Security Bank, Duluth, GA
  • Size: 2 branches, $96.5 million in assets, $94.0 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, excluding the Cede & Co. brokered deposits
  • Acquiring Bank: Bank of Upson, Thomaston, GA
  • Rate Changes: Bank of Upson will review rates
  • Estimated Cost to Deposit Insurance Fund: $29.9 million
  • Enforcement Action:None
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

33rd Bank Failure of 2010 (3rd in UT)

  • FDIC Press Release
  • Closed Bank: Advanta Bank Corp., Draper, UT
  • Size: 1 branch, $1.6 billion in assets, $1.5 billion in deposits
  • Possible Uninsured Deposits: $247,000
  • Acquiring Bank: None
  • Rate Changes: N/A
  • Estimated Cost to Deposit Insurance Fund: $635.6 million
  • Enforcement Action: 11/24/09 FDIC Consent Order
  • Financial Ratings: NR (Not Rated) at Bankrate.com, 0 star (lowest) at BauerFinancial

34th Bank Failure of 2010 (4th in GA)

  • FDIC Press Release
  • Closed Bank: Appalachian Community Bank, Ellijay, GA
  • Size: 10 branches, $1.01 billion in assets, $917.6 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: Community & Southern Bank, Carrollton, GA
  • Rate Changes: Community & Southern Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $419.3 million
  • Enforcement Action: FDIC 4/21/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

35th Bank Failure of 2010 (5th in GA)

  • FDIC Press Release
  • Closed Bank: Bank of Hiawassee, Hiawassee, GA
  • Size: 5 branches, $377.8 million in assets, $339.6 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, excluding the Cede & Co. brokered deposits
  • Acquiring Bank: Citizens South Bank, Gastonia, NC
  • Rate Changes: Citizens South Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $137.7 million
  • Enforcement Action: None
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

36th Bank Failure of 2010 (1st in AL)

  • FDIC Press Release
  • Closed Bank: First Lowndes Bank, Fort Deposit, AL
  • Size: 4 branches, $137.2 million in assets, $131.1 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: First Citizens Bank, Luverne, AL
  • Rate Changes: First Citizens Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $38.3 million
  • Enforcement Action: 3/3/08 FDIC C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

37th Bank Failure of 2010 (4th in MN)

  • FDIC Press Release
  • Closed Bank: State Bank of Aurora, Aurora, MN
  • Size: 1 branch, $28.2 million in assets, $27.8 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: Northern State Bank, Ashland, WI
  • Rate Changes: Northern State Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $4.2 million
  • Enforcement Action: FDIC 3/19/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

References:



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Comments
1 Comments.


Comment #2 by Anonymous posted on
Anonymous
"One interesting thing to note regarding my September 2008 post on Advanta is that it had 4-star ratings at both BauerFinancial and Bankrate.com."

Perhaps these ratings mean very little when it comes to the future strength of banking institutions. Not only can a bank or credit union go downhill very quickly but, like Advanta, fail and the FDIC cannot find a buyer for it. With the increasing amount of failures of financial institutions, unless one is "too big to fail", it doesn't instill much optimism for the coming year.

-1