Dedicated to Deposits: Deals, Data, and Discussion
About Ken Tumin About Ken Tumin - Founder and Editor

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

Featured Savings Rates

Popular Posts

Featured Accounts

Three Banks Closed by Regulators in Florida, Pennsylvania and Wisconsin

POSTED ON BY

Three banks failed today which brings the yearly total of banks failures to 149. The banks were in located in Florida, Pennsylvania and Wisconsin. This was the first bank failure in Pennsylvania for 2010. At the opposite end, this was Florida's 28th bank failure for the year. Florida leads the nation with the most failures in 2010.

For all three bank failures, the FDIC was able to find buyers to assume all non-brokered deposits, even deposits above the FDIC limit.

Two of the closed banks used to offer high-yield reward checking accounts. The closed Pennsylvania bank, Allegiance Bank of North America, had offered a reward checking account with a yield of 2.75% for balances up to $250K as late as February 2010. This rate fell to 0.85% in March.

The closed Wisconsin bank, First Banking Center, had offered a reward checking account that was paying a yield of 3.01% for balances up to $25K as late as August of this year. The yield fell to 0.86% in August which was soon after the Federal Reserve issued a Prompt Corrective Action against the bank.

Both of the above rate cuts appeared to be due to the FDIC rate caps that applied to less than well capitalized banks. The FDIC continues to lump reward checking accounts in the interest checking category. This shows why it's better to choose a reward checking account from a credit union or from a healthy bank.

There were no credit union liquidations this week. The total number of credit union liquidations this year remains at 17. However, the NCUA did announce that Constitution Corporate Federal Credit Union will be liquidated on November 30th. The NCUA had placed this corporate credit union into conservatorship in September.

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

147th Bank Failure of 2010 (28th in Florida)

  • FDIC Press Release
  • Closed Bank: Gulf State Community Bank, Carrabelle, FL
  • Size: 5 branches, $112.1 million in assets, $112.2 million in deposits
  • Acquiring Bank: Centennial Bank, Conway, AR
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by Centennial Bank
  • Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $42.7 million
  • Enforcement Action: FDIC 11/9/09 Consent Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 0 out of 5 with a Texas Ratio of 436.25% at DepositAccounts.com

148th Bank Failure of 2010 (1st in Pennsylvania)

  • FDIC Press Release
  • Closed Bank: Allegiance Bank of North America, Bala Cynwyd, PA
  • Size: 5 branches, $106.6 million in assets, $92.0 million in deposits
  • Acquiring Bank: VIST Bank, Wyomissing, PA
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by VIST Bank
  • Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $14.2 million
  • Enforcement Action: FDIC 11/4/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 0 out of 5 with a Texas Ratio of 167.55% at DepositAccounts.com

149th Bank Failure of 2010 (2nd in Wisconsin)

  • FDIC Press Release
  • Closed Bank: First Banking Center, Burlington, WI
  • Size: 17 branches, $750.7 million in assets, $664.8 million in deposits
  • Acquiring Bank: First Michigan Bank, Troy, MI
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by First Michigan Bank
  • Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $142.6 million
  • Enforcement Action: Federal Reserve 10/23/09 Written Agreement, Federsal Reserve 8/11/10 PCA
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 0 out of 5 with a Texas Ratio of 200.11% at DepositAccounts.com

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

References:


Related Posts

Comments
5 comments.
Comment #1 by 51hh posted on
51hh
Thanks much, Ken, for the useful information.

It is alarming that the two of the three closed banks offered Reward Checking (Allegiance Bnak in PA and First Bank Center in WI); 5-6% in the 07/08 time frame.  High-Yield Reward Checking does seem to be a convenient vehecle for banks to raise cash in difficult times.  Another lesson is that the bank size seems to have little to do with the likelihood of closure.   

As RCA customers, we have to be alert on bank ratings, especially on FDIC C&D Order.  It is prudent to bail out early before those warning signs.  Even with FDIC insurance protection, it may be difficult or time consuming to get funds out after the bank closure. 

6
Comment #2 by Anonymous posted on
Anonymous
In the current environment, I don't think that using a reward checking account for savings is a winning proposition.  Particularly when you need to balance multiple accounts due to limits, it's not worth the effort.

4
Comment #3 by William (anonymous) posted on
William
Thank you for the line, "...the FDIC was able to find buyers to assume all non-brokered deposits, even deposits above the FDIC limit."  I have been wondering about this for some time.  Typically, the wording for a failed bank's takeover does not specifically mention deposits above the FDIC limit.  (I even sent an email to the FDIC asking if that normally is the case when another bank assumes ALL the deposits of the failed bank.  I received an automated response, but no follow up.) 

So, shall I assume that when a press release states that the FDIC was able to find buyers for ALL non-brokered deposits of a failed bank, that includes even the amounts above the $250k limit per customer?  Even if it is not stated specifically?

2
Comment #4 by Anonymous posted on
Anonymous
Personally, I would NOT ASSUME anything that is not stated specifically. 

1
Comment #5 by jeremy33 posted on
jeremy33
To #3 - that does seem to be the way the FDIC has worded its press releases in the past. When the acquiring bank only acquires deposits up to the FDIC limits (which seems to be increasingly rare these days), this is normally specified, along with an estimate of the amount of potentially uninsured deposits.

1