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Four Banks Failures This Week - Total for Year Reaches 30

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Three banks failed today, with one rare closure on Thursday. LibertyPointe Bank in New York City was seized by regulators on Thursday. Another NYC bank, The Park Avenue Bank, failed today. It's not unusual to have multiple banks closed by regulators in the same city on the same day, so that's probably not the reason for the Thursday closure. One of my readers suggested another reason:

they closed it on Thursday because many of its employees/principals are Orthodox Jewish who do not work after sundown on Fridays through sundown Saturday

Besides the Thursday failure, all four bank closures were typical. The FDIC was able to find buyers for all four of the failed banks, and the acquiring banks assumed all deposits even those above the FDIC limit. This is different than last week when two of the four failed banks didn't have buyers.

Also typical but unfortunate, the assuming banks have not decided if they will keep the rates unchanged on existing CDs. It's likely that they will cut the rates. CD holders will have the option to make a penalty free early withdrawal, but that doesn't help much in today's low-rate environment.

I've done several posts over the last few years of three of these four banks. Both of the New York banks had offered high CD rates. The other bank, Old Southern Bank, was based in Orlando, Florida, and it had been offering a high-yield checking account. It wasn't a reward checking account, but just a regular interest checking account which maintained a very competitive rate. My last report on it was in April 2009 when the checking account was paying 2.50%.

One final note, there were no credit union failures this week. Four banks and one credit union failed last Friday (March 5th).

Below is a summary of this week's bank failures:

27th Bank Failure of 2010 (1st in NY)

  • FDIC Press Release
  • Closed Bank: LibertyPointe Bank, New York, NY
  • Size: 3 branches, $209.7 in assets, $209.5 million in deposits
  • Possible Uninsured Deposits: All deposit accounts have been transferred
  • Acquiring Bank: Valley National Bank, Wayne, NJ
  • Rate Changes: Valley National Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $24.8 million
  • Enforcement Action: FDIC 7/16/09 C&D Order, 10/20/09 Prompt Corrective Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

28th Bank Failure of 2010 (2nd in NY)

  • FDIC Press Release
  • Closed Bank: The Park Avenue Bank, New York, NY
  • Size: 4 branches, $520.1 million in assets, $494.5 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, excluding the Cede & Co. brokered deposits
  • Acquiring Bank: Valley National Bank, Wayne, NJ
  • Rate Changes: Valley National Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $50.7 million
  • Enforcement Action: 2/11/09 FDIC C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

29th Bank Failure of 2010 (4th in FL)

  • FDIC Press Release
  • Closed Bank: Old Southern Bank, Orlando, FL
  • Size: 7 branches, $315.6 million in assets, $319.7 million in deposits
  • Possible Uninsured Deposits: All deposit accounts have been transferred
  • Acquiring Bank: Centennial Bank, Conway, AR
  • Rate Changes: Centennial Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $94.6 million
  • Enforcement Action: 9/17/09 Federal Reserve Written Agreement, 1/13/10 Prompt Corrective Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

30th Bank Failure of 2010 (1st in LA)

  • FDIC Press Release
  • Closed Bank: Statewide Bank, Covington, LA
  • Size: 6 branches, $243.2 million in assets, $208.8 million in deposits
  • Possible Uninsured Deposits: All deposit accounts have been transferred
  • Acquiring Bank: Home Bank, Lafayette, LA
  • Rate Changes: Home Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $38.1 million
  • Enforcement Action: FDIC 3/25/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

No Credit Union Liquidations This Week

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

References:


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Comments
5 comments.


Comment #2 by Anonymous posted on
Anonymous
I have an 18 month CD at 5.20% with them. I only have 3 more weeks till maturity, so if they don't keep the rate, it only means I withdraw my money 3 weeks early.

2
Comment #3 by Anonymous posted on
Anonymous
I just called Valley National Bank and was told that they will continue to honor the rates and conditions of the Park Avenue Bank's CDs. My 18-month 5.20% CD will expire soon too. Where do I go from here?

-1
Comment #4 by Anonymous posted on
Anonymous
The Park Avenue Bank is in the news again...

http://www.nytimes.com/aponline/2010/03/15/us/AP-US-Ex-Bank-President-Arrest.html

1
Comment #5 by Anonymous posted on
Anonymous
Got a letter from Valley National Bank telling me my 5.20% CD os now earning 0.20%.

Bye bye Valley.

2