Dedicated to Deposits: Deals, Data, and Discussion

Four Banks and One Credit Union Fail - Includes UFB Direct and CBDirect

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Four banks and one credit union failed today. The first two bank failures (Sun American Bank in FL and Bank of Illinois) were the typical closures. The FDIC was able to find buyers which assumed all deposits even those above the FDIC limit. The other two bank failures were different. The FDIC wasn't able to find buyers for either Waterfield Bank in MD or Centennial Bank in UT. Thus, these banks are being closed, and the FDIC will be mailing checks to depositors. The checks will only include the insured amounts. Fortunately, the FDIC reported that the vast majority of deposits were under the FDIC limit.

End of UFB Direct, AARP Financial Savings Center?

Note what the FDIC mentioned about Waterfield Bank:

[Waterfield Bank] took deposits from customers via the Internet and 38 affinity groups.

Here's what was stated in the small print at UFB Direct's website:

All deposit products offered through this Banking Center will be opened and deposit processing services provided by Waterfield Bank.
UFB Direct's website has now been replaced with a FDIC page. So this appears to be the end of UFB Direct. The FDIC did arrange for a new version of Waterfield Bank to continue for another 30 days to give customers time to access their insured funds and time to move accounts to other banks.

As of 10:45pm, AARP Financial Savings Center's website is still operational. They had a similar arrangement with Waterfield as UFB Direct:

All Checking and Money Market Savings deposit products available through the Savings Center are offered by and will be opened and processed through Waterfield Bank

End of the 3% No-Cap Reward Checking Account

Centennial Bank of Ogden, Utah was the bank that operated CBDirect.com which offered the nationwide 3% no-cap reward checking account. Since the FDIC wasn't able to find a buyer, this reward checking account no longer exists. Unlike Waterfield, the FDIC didn't set up a temporary bank. Customers will not have access to their money for at least a week until they receive a check for their insured deposits. This shows why you don't want to rely 100% on any one bank.

One other note regarding this bank is that it has no relationship to Centennial Bank in California.

Small Credit Union Liquidation

The NCUA liquidated a small credit union, Lawrence County School Employees Federal Credit Union. The NCUA was able to arrange for another credit union to purchase and assume the credit union. One interesting thing to note about this credit union is that Bankrate.com had rated this credit union with 4 stars (sound) based on 9/30/09. However, BauerFinancial gave it only a zero-star rating (lowest). I'm not sure why there's such a large difference. BauerFinancial ratings are now based on 12/31/09 data. Bankrate.com ratings are still based on 9/30/09. So that may be part of the reason.

Below is a summary of today's bank and credit union failures:

23rd Bank Failure of 2010 (4th in FL)

  • FDIC Press Release
  • Closed Bank: Sun American Bank, Boca Raton, FL
  • Size: 12 branches, $535.7 in assets, $443.5 million in deposits
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. brokered deposits have been transferred
  • Acquiring Bank: First-Citizens Bank & Trust Company, Raleigh, NC
  • Rate Changes: First-Citizens Bank & Trust Company will review rates
  • Estimated Cost to Deposit Insurance Fund: $103.8 million
  • Enforcement Action: Federal Reserve 2/3/2009 Written Agreement, 1/04/10 Prompt Corrective Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

24th Bank Failure of 2010 (3rd in IL)

  • FDIC Press Release
  • Closed Bank: Bank of Illinois, Normal, IL
  • Size: 2 branches, $211.7 million in assets, $198.5 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, excluding the Cede & Co. brokered deposits
  • Acquiring Bank: Heartland Bank and Trust Company, Bloomington, IL
  • Rate Changes: Heartland Bank and Trust Company will review rates
  • Estimated Cost to Deposit Insurance Fund: $53.7 million
  • Enforcement Action: 10/14/09 Federal Reserve written agreement, 11/24/09 Prompt Correcdtive Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

25th Bank Failure of 2010 (1st in MD)

  • FDIC Press Release
  • Closed Bank: Waterfield Bank, Germantown, MD
  • Size: 1 branch, $155.6 million in assets, $156.4 million in deposits
  • Possible Uninsured Deposits: $407,000
  • Acquiring Bank: None
  • Rate Changes: N/A
  • Estimated Cost to Deposit Insurance Fund: $51.0 million
  • Enforcement Action: 10/1/09 OTS Cease & Desist Order, 2/3/10 OTS Prompt Corrective Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

26th Bank Failure of 2010 (2nd in UT)

  • FDIC Press Release
  • Closed Bank: Centennial Bank, Ogden, UT
  • Size: 5 branches, $215.2 million in assets, $205.1 million in deposits
  • Possible Uninsured Deposits: $1.8 million
  • Acquiring Bank: None
  • Rate Changes: N/A
  • Estimated Cost to Deposit Insurance Fund: $96.3 million million
  • Enforcement Action: FDIC 6/26/09 Cease & Desist Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

4th Credit Union Liquidation of 2010

  • NCUA Press Release
  • Liquidated CU: Lawrence County School Employees Federal Credit Union, New Castle, PA
  • Size: $2.6 million in assets and served 1,085 members
  • Acquiring CU: First Choice Federal Credit Union, New Castle, PA
  • Financial Ratings: 4 star (sound) at Bankrate.com, 0 star (lowest) at BauerFinancial

The above Bankrate ratings are based on 9/30/09 data. BauerFinancial Ratings are based on 12/31/09 data.

References:



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Comments
11 Comments.
Comment #1 by Anonymous posted on
Anonymous
Despite the low ratings, I opened an account there several months ago from a distant state because of what these days was a high rate, 3%, with no cap, unlike most rewards accounts. Supposedly a merger with another firm was imminent that would resolve the financial issues, with recent announcements of a "bright future," but this never happened.

I was under the FDIC cap and will get my money back. I don't know whether I will get the accrued interest that was due to be paid on the 10th.

The issue now is what to do with the money, to maximize yield, not get stuck if rates go up, and have access to the money if needed. The best rates now on liquid accounts are 2%, and that can change. I am seriously considering a long term CD from Ally because of the low early withdrawal penalty and no permission needed to withdraw. One advantage (assuming they don't fail) is protection, for a while, from further rate declines.

2
Comment #2 by Anonymous posted on
Anonymous
By "there" I mean Centennial in Utah.

2
Comment #3 by Hoody (anonymous) posted on
Hoody
I'm getting a little leery of even these star ratings anymore. I decided  now to just bite it and stay with my "local" big banks 3 of them and 1 credit union, I don't even wana be near the 250K so called limit anymore.

I am also sitting and waiting for the rates to move, when they get to at least 4 or 4.5 for long term that’s all I need with my expense’s and lifestyle.

Maybe when "uncle" Ben gets off his **** and raises the fed funds rate things will change, I keep hearing how it would be bad to have the Regan 80's back,,  hell I'll take em,  interest rates were at 15% lol.

2
Comment #5 by AnY MOUSE (anonymous) posted on
AnY MOUSE
15 PERCENT IN YOUR DREAMS ??

-1
Comment #6 by Anonymous posted on
Anonymous
Appreciate the heads up re Bauer having switched to 12/31 dataset.  Critical stuff.  Last September is ancient history in these financial times.  Worthless.  Will go with Bauer until Bankrate catches up . . . if they ever do.

4
Comment #7 by Anonymous posted on
Anonymous
To AnY MOUSE

 

You asked, "15 PERCENT IN YOUR DREAMS ??"  Well, back in the 80's I opened my first IRA at 15.25%.  Could happen again!

0
Comment #9 by Anonymous posted on
Anonymous
On a bank pay out like CBDirect, are all uninsured funds lost?

1
Comment #10 by Anonymous posted on
Anonymous
I have put money in CDARS with AARP Savings which, of course, is the defunct Waterfield. Waterfield placed the money, according to the statements I receive, with Reliance Trust Co. of Atlanta who in turn put the money in CDs in nine different FDIC insured banks. That's the way CDARS works of course. But, now the agent who set the whole thing up is gone!

Who do i go to about these 9 CDs?

Will the 9 underlying banks show the CDs on their books in my name?

Will Reliance Trust Co.  maintain the account? If so, who will do the reporting to me of the status of the accounts? Will Reliance Trust co. charge me for this service?

Can I just get paper from the 9 underlying FDIC insured banks and  hold the CDs individually?

This must have happened before. What happens to CDARS accounts when the agent-bank goes bust?

Thanks folks. Any one who knows what they are talking about please speak up!

 

 

 

1
Comment #11 by Anonymous posted on
Anonymous
Re: Anon #9

When a bank is paid out like this, the FDIC advances money to repay all the insured depositors. Then the FDIC tries to pay itself back by selling off the failed bank's assets (loans, real estate, securities, etc.) If the FDIC is able to sell the assets at a price that pays off all the money the FDIC spent, then anything additional that is recovered would possibly go to uninsured depositors.

However, in this case the FDIC is estimating the closure will cost FDIC quite a bit of money, so I don't expect there would be anything left over for uninsured depositors.

1
Comment #12 by Anonymous posted on
Anonymous
Re: guy with CDARS

The CDARS program was developed through Promontory Interfinancial Network of Arlington, VA...why not call them and ask how to get your money?

2
Comment #13 by sister of got screwed twice (anonymous) posted on
sister of got screwed twice
This is two years down the road the failure of those banks continued to ripple. Oh how they failed. I am not sure the entire banking industry is not a "hedgefund" shame on them each and every one and Hell will be hot! Today the POTUS is bailing with a teaspoon to save his election. Frontier bought a piece of Sun America who was never solvent. Frontier had (1) officer. A Doctor who had committed Medicare fraud and is still free. I am a victim of both of these institutes. How unpleasant for us, I am sure if I could go back to work they would take my money. Instead my disabled self will find a cheap tent and restart my American Dream! UP theirs! Devalue my neighbors property and raise crime ! Good Job!

1