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Four Banks Fail Including United Western Bank in Colorado

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The FDIC is back to its busy Friday schedule. Banks failed in Georgia, South Carolina, North Carolina and Colorado. With these four failures, the total number of bank failures for 2011 is now at 7. That compares to 9 banks that had failed by this time last year.

One of the four banks that failed did not have a buyer. That was Enterprise Banking Company in Georgia, and it will be shut down by the FDIC. The FDIC will be keeping it open until January 28th as a temporary bank to allow depositors access to their insured deposits so they will have time to open accounts at other banks. This is only for liquid accounts. For CDs and IRAs, the FDIC will be mailing checks.

Depositors at Enterprise Banking Company who had over the FDIC coverage limits will likely lose their uninsured deposits. In the past the FDIC has provided an estimate of the uninsured deposit amounts. That was not the case this time. Here's what the FDIC mentioned in its press release:

At the time of closing, the amount of deposits exceeding the insurance limits was undetermined. Uninsured deposits were not transferred to the DINB. The amount of uninsured deposits will be determined once the FDIC obtains additional information from those customers.

One piece of information that the FDIC may need is beneficiary information. For POD accounts, the listed beneficiaries must be alive in order to extend the standard FDIC limit. In the past, the FDIC also needed to make sure the beneficiaries were qualified. However, new FDIC rules have eliminated this requirement.

For the other three bank failures, the FDIC was able to find buyers which agreed to assume all deposits. The only exception is one bank which is not assuming certain brokered deposits. The main concern for depositors will be what will happen to their existing CDs from the failed banks. The acquiring banks have the right to lower the rates. If rates are changed, the depositors will be allowed to make a penalty-free withdrawal, but that doesn't help much in today's low interest rate environment.

The largest bank that failed was United Western Bank in Denver, Colorado. It had 8 branches and $2.05 billion in assets. The FDIC arranged for First-Citizens Bank & Trust Company from Raleigh, NC to acquire United Western. First-Citizens has purchased many failed banks in the past couple of years, and it has grown quite a bit. Before this acquisition, First-Citizens had $18.11 billion in assets with 423 branches in 16 states. Those who live near United Western Bank branches may want to keep an eye out for any CD specials. First-Citizens has a history of offering competitive CD specials after it takes over failed banks. This happened last year in both South Florida and in Southern California.

There were no credit union liquidations this week. So far this year there haven't been any liquidations. There were 19 credit union liquidations in 2010.

Below is a summary of today's bank failures:

4th Bank Failure of 2011 (2nd in Georgia)

  • FDIC Press Release
  • Closed Bank: Enterprise Banking Company, McDonough, GA
  • Size: 2 branches, $100.9 million in assets, $95.5 million in deposits
  • Acquiring Bank: None
  • Possible Uninsured Deposits: FDIC has not yet determined amount of deposits exceeding the insurance limits
  • Rate Changes: FDIC will mail checks directly to customers with CDs and IRAs.
  • Estimated Cost to Deposit Insurance Fund: $39.6 million
  • Enforcement Action: FDIC 12/21/09 Consent Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 825.74% at DepositAccounts.com

5th Bank Failure of 2011 (1st in South Carolina)

  • FDIC Press Release
  • Closed Bank: CommunitySouth Bank and Trust, Easley, SC
  • Size: 6 branches, $440.6 million in assets, $402.4 million in deposits
  • Acquiring Bank: CertusBank, N.A., Easley, SC (newly-chartered bank subsidiary of Blue Ridge Holdings)
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by CertusBank, N.A.
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $46.3 million
  • Enforcement Action: FDIC 2/23/10 Consent Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 244.68% at DepositAccounts.com

6th Bank Failure of 2011 (1st in North Carolina)

  • FDIC Press Release
  • Closed Bank: The Bank of Asheville, Asheville, NC
  • Size: 5 branches, $195.1 million in assets, $188.3 million in deposits
  • Acquiring Bank: First Bank, Troy, NC
  • Possible Uninsured Deposits: All deposit accounts, including brokered deposits, have been assumed by First Bank
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $56.2 million
  • Enforcement Action: NC State 9/23/10 Consent Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 330.17% at DepositAccounts.com

7th Bank Failure of 2011 (1st in Colorado)

  • FDIC Press Release
  • Closed Bank: United Western Bank, Denver, CO
  • Size: 8 branches, $2.05 billion in assets, $1.65 billion in deposits
  • Acquiring Bank: First-Citizens Bank & Trust Company, Raleigh, NC
  • Possible Uninsured Deposits: All deposit accounts, including brokered deposits, have been assumed by First-Citizens Bank & Trust Company
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $312.8 million
  • Enforcement Action: OTS 6/225/10 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 1 star at BauerFinancial, 2 out of 5 with a Texas Ratio of 49.41% at DepositAccounts.com

The above ratings are based on September 2010 data.

References:


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Comments
Comment #1 by Anonymous posted on
Anonymous
If you want to get a good sense of what banks will fail take a look at http://bankpred.blogspot.com.

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