The FDIC is ramping up slowly after taking two weeks off. There was just one bank closure today. Horizon Bank, a small Florida bank, was closed by regulators, and the FDIC arranged for the Bank of the Ozarks in Little Rock, Arkansas to assume all deposits. This is the year's 119th bank failure for the nation and 23rd for Florida. As you can see in my review of bank failures by state, Florida has a big lead on the other states.
The main concern for Horizon customers will be what happens to the rates of their CDs. As is typical, the FDIC's Q&As only says that "current rates will be reviewed by the acquiring institution and may be lowered." However, Bank of the Ozarks provided more information on this question on its website. In its Q&As for Horizon Bank customers, it provided the bad news:
Will there be any changes to my CDs or IRAs?
* Rates on certain CD accounts and IRA accounts will be adjusted to current market rates. We will notify you by mail of any changes to interest rates paid on time deposit accounts.
* You can withdraw part or all of your funds from your CD without an early withdrawal penalty until you enter a new agreement with Bank of the Ozarks, provided you are not using your CD to secure a loan.
* If you currently receive interest payments, those payments will continue without interruption.
I still think it would be fairer if the acquiring banks only modified CD rates to market rates that existed when the CDs were opened.
There were no credit union liquidations this week. The total number of credit union liquidations for 2010 remains at 14.
Below is a summary of today's bank failure:
119th Bank Failure of 2010 (23rd in Florida)
- FDIC Press Release
- Closed Bank: Horizon Bank, Bradenton, FL
- Size: 4 branches, $187.8 million in assets, $164.6 million in deposits
- Acquiring Bank: Bank of the Ozarks, Little Rock, AR
- Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co deposits have been assumed by Bank of the Ozarks
- Rate Changes: Rates on certain CD accounts and IRA accounts will be adjusted to current market rates (Bank of the Ozarks Q&As)
- Estimated Cost to Deposit Insurance Fund: $58.9 million
- Enforcement Action: Federal Reserve 11/10/09 Written Agreement, 5/27/10 Prompt Corrective Action
- Financial Ratings: 1 out of 5 at DepositAccounts.com, 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial