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Two Banks in Missouri and One in Kansas Closed by Regulators

POSTED ON BY

After last Friday's break from closures, the FDIC is back in action this Friday. Three banks were closed. Two were in Missouri, and one was in Kansas. That brings this year's total to 132.

The first bank to fail today was Security Savings Bank FSB in Kansas. This bank used to offer competitive CDs that were available nationwide. Late in 2009 they stopped offering CDs to customers outside their local market. It's interesting to note that they received an OTS Cease and Desist Order around the time that they changed this policy.

The second bank to fail today was WestBridge Bank and Trust Company in Missouri. This was a small bank with just one branch.

The third bank to fail, Premier Bank, was also based in Missouri. This was the largest of the three with 9 branches and $1.18 billion in assets. According to this St. Louis Business Journal article, the bank had "startlingly bad financials for many quarters, and its failure was long expected by local bankers". The bank's Texas Ratio of 420.88% was inline with "startlingly bad financials". Any bank with a Texas Ratio near or greater than 100% is considered at risk. This bank's failure was costly to the FDIC's Deposit Insurance Fund (DIF). The FDIC estimated the cost at $406.9 million. That's almost 5x the cost of Security Savings Bank FSB's closure even though Security Savings Bank FSB was only half the size in terms of assets.

For all of the closures, the FDIC was able to find another bank to assume all regular deposits. The only issue for depositors will be the possibility that these acquiring banks won't honor existing CD rates to maturity. The FDIC listed the same information in its Q&A guide for all three closures:

Interest on deposits accrued through close of business the day the bank was closed will be paid at your same rate. Current rates will be reviewed by the acquiring institution and may be lowered; however, you may withdraw funds from any transferred account without early withdrawal penalty until you enter into a new deposit account agreement

If you have a CD at any of these closed banks, please let us know what the new banks decide.

There were no credit union liquidations this week. The total number of credit union liquidations for this year remains at 15.

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

130th Bank Failure of 2010 (2nd in Kansas)

  • FDIC Press Release
  • Closed Bank: Security Savings Bank, F.S.B., Olathe, KS
  • Size: 9 branches, $508.4 million in assets, $397.0 million in deposits
  • Acquiring Bank: Simmons First National Bank, Pine Bluff, AR
  • Possible Uninsured Deposits: All deposit accounts, including brokered deposits, have been assumed by Simmons First National Bank
  • Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $82.2 million
  • Enforcement Action: OTS 8/7/09 C&D Order, OTS 8/18/10 Prompt Corrective Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 184.56% at DepositAccounts.com

131st Bank Failure of 2010 (5th in Missouri)

  • FDIC Press Release
  • Closed Bank: WestBridge Bank and Trust Company, Chesterfield, MO
  • Size: 1 branch, $91.5 million in assets, $72.5 million in deposits
  • Acquiring Bank: Midland States Bank, Effingham, IL
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by Midland States Bank
  • Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $18.7 million
  • Enforcement Action: FDIC 1/23/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 0 out of 5 with a Texas Ratio of 295.40% at DepositAccounts.com

132nd Bank Failure of 2010 (6th in Missouri)

  • FDIC Press Release
  • Closed Bank: Premier Bank, Jefferson City, MO
  • Size: 9 branches, $1.18 billion in assets, $1.03 billion in deposits
  • Acquiring Bank: Providence Bank, Columbia, MO
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits have been assumed by Providence Bank
  • Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $406.9 million
  • Enforcement Action: None
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 0 out of 5 with a Texas Ratio of 420.88% at DepositAccounts.com

The above ratings are based on 6/30/2010 data.

References:



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1 Comments.


Comment #2 by shota posted on
shota
Who is responsible?

Do you think that banks are the ones that caused the current recession? You're right! They did!

Did you really think that "we need $700 billion tomorrow or we won't be able to loan" was true?

As far as I am concerned banks STOPPED loaning money to small businesses, individuals, and students right after they received the TARP money? Chase, for example, CLOSED the whole student loan department last year and Bank of America CEASED issuing Gold Option Line of Credits. is this reasonable? Or is this acceptable? 

I am against over regulation, but it seems that private banks in the United States have become somewhat incapable to properly loan out to those who can afford having credit. I feel that there is no balance in banks anymore and we need it back. Banks were either issuing credits left and right prior to crisis or now they have simply STOPPED loaning. Please don't let anyone make you believe otherwise. Just look at the economy!

And let's stop blaming people for getting mortgages they could not handle! Bankers are the primary defense against suspicious activities conducted by customer and by making sure that all the information taken for credit application is valid. Anything less than that is simple FRAUD punishable by criminal law. We don't need more regulation, we need more enforcement of existing laws.

Shota

www.ranxem.com

2