Dedicated to Deposits: Deals, Data, and Discussion

Two Banks and Three Corporate Credit Unions Seized by Regulators

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Two small banks were closed by regulators this Friday. This brings the yearly total to 127. The first bank to fail today was Haven Trusts Bank Florida. This increased the number of failures in Florida to 24. On the opposite side of the nation, North County Bank in Washington State failed.

The big news for today wasn't these bank closures, but was the seizures of three corporate credit unions by the NCUA. Here's an excerpt of the NCUA press release:

[The NCUA] today assumed control of three undercapitalized corporate credit unions, announced a plan to isolate the impaired assets in the corporate credit union system, and finalized a set of stronger regulations – key elements in its efforts to resolve the financial challenges facing corporate credit unions without disrupting consumer service.

Note, these corporate credit unions don't directly serve individuals. Their customers are other credit unions. This WSJ article has further details. Last year the NCUA placed two corporate credit unions into conservatorship.

Since these credit unions were placed into conservatorship, they are not counted as credit union closures. So the total number of credit union failures for this year remains at 15.

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

126th Bank Failure of 2010 (24th in Florida)

  • FDIC Press Release
  • Closed Bank: Haven Trust Bank Florida, Ponte Vedra Beach, FL
  • Size: 2 branches, $148.6 million in assets, $133.6 million in deposits
  • Acquiring Bank: First Southern Bank, Boca Raton, FL
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. deposits, have been assumed by First Southern Bank
  • Rate Changes: If your interest rate has changed, you will be notified by mail (bank's CEO letter)
  • Estimated Cost to Deposit Insurance Fund: $31.9 million
  • Enforcement Action: FDIC 2/12/10 Consent Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 0 out of 5 at DepositAccounts.com

127th Bank Failure of 2010 (9th in Washington State)

  • FDIC Press Release
  • Closed Bank: North County Bank, Arlington, WA
  • Size: 4 branches, $288.8 million in assets, $276.1 million in deposits
  • Acquiring Bank: Whidbey Island Bank, Coupeville, WA
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. deposits, have been assumed by Whidbey Island Bank
  • Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $72.8 million
  • Enforcement Action: FDIC 8/14/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 0 out of 5 at DepositAccounts.com

The above ratings are based on 6/30/2010 data except for Bankrate.com which is based on March 2010 data.

References:


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Comments
3 comments.
Comment #1 by Anonymous posted on
Anonymous
Where can I find info on how long it takes for the customers retrieve their funds from these banks (after they are declared failures)? days/weeks/months?

On an unrelated note, is there a list of banks that offered RCA accounts and failed? It will be even more interesting to see how the funds were returned.

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Comment #2 by Anonymous posted on
Anonymous
"Where can I find info on how long it takes for the customers retrieve their funds from these banks (after they are declared failures)? days/weeks/months?"

From personal experience, principle and interest from a failed FDIC insured, non-brokered account will be received by the account holder in a matter of days. For a similar brokered account it may take several weeks. These days it pays to exercise extra caution with brokered CDs and savings vehicles.

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Comment #3 by Anonymous posted on
Anonymous
Because of NCUA's relunctance to put in place a "Concentrance Risk Policy " for the Corporate Banks and allowing them to be a money hungry entity, by letting the banks secure $50 billion of Mortgage backed securities with only $ 7 billion of insurance is criminal.  Now the regulators are taking over the problem they did not handle and asking the natural credits to pay for it over the 7-10 years or so.  Go figure.  I would guess a large portion of smaller credit unions in the $10 million to $ 100 million range will go out of business or be forced to merge as a result of NCUA and Corporate Banks incompetence and greed for money at the natural credit union's expense with little or no value received.  They are not "Legacy Assets"  They are "Toxic Assets"     Whtch for closures of small credit unions, mergers, more coummunity banks and private insured credit unions as a result of this debacle.

 

A concerned Texas Credit Union

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