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Regulators Closed Four Banks in Florida, Michigan, Wisconsin and California

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Regulators closed four banks today in Florida, Michigan, Wisconsin and California. That brings the total number of 2011 bank failures to 18. All four banks were small. The largest, Peoples State Bank in Michigan, had assets of $390.5 million.

The FDIC arranged for all four banks to be acquired by other banks. All deposits were assumed by these new banks except for certain brokered deposits.

The new banks have the right to reduce rates on existing CDs from the failed banks. As usual, the FDIC stated the following for each closure:

Current rates will be reviewed by the new bank and may be lowered; however, you may withdraw funds from any transferred account without early withdrawal penalty until you enter into a new deposit agreement

Sometimes the acquiring banks will include FAQs on their websites with some additional information. That was the case with First Michigan Bank which assumed the deposits of the failed Peoples State Bank. One of the FAQs mentioned that CDs and IRAs rates would be lowered:

In order to begin to restore the health of the Bank and in keeping with terms of our purchase and assumption agreement, interest rates will be adjusted as soon as possible on all depository accounts, including Certificates of Deposit and IRAs, to rates that are competitive in today’s interest rate environment. You will find our current interest rates and annual percentage yield (APY) information on our website at www.firstmichiganbank.com. More information will be communicated as it becomes available.

Unfortunately, the rates will be adjusted "to rates that are competitive in today's interest rate environment" rather than to rates that were competitive in the interest rate environment that existed when the CDs were opened.

There were no credit union liquidations this week. The only credit union liquidation for the year occurred last Friday.

Below is a summary of today's bank failures:

15th Bank Failure of 2011 (2nd in Florida)

  • FDIC Press Release
  • Closed Bank: Sunshine State Community Bank, Port Orange, FL
  • Size: 5 branches, $125.5 million in assets, $116.7 million in deposits
  • Acquiring Bank: Premier American Bank, N.A., Miami, FL
  • Possible Uninsured Deposits: All deposit accounts, including brokered deposits, have been assumed by Premier American Bank, N.A.
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $30.0 million
  • Enforcement Action: FDIC 9/21/09 C&D Order
  • Financial Ratings: 1 star at Bankrate.com, 0 stars at BauerFinancial, 1 out of 5 with a Texas Ratio of 317.79% at DepositAccounts.com

16th Bank Failure of 2011 (1st in Michigan)

  • FDIC Press Release
  • Closed Bank: Peoples State Bank, Hamtramck, MI
  • Size: 10 branches, $390.5 million in assets, $389.9 million in deposits
  • Acquiring Bank: First Michigan Bank, Troy, MI
  • Possible Uninsured Deposits: All deposit accounts, including any brokered deposits, have been assumed by First Michigan Bank
  • Rate Changes: Interest rates will be adjusted as soon as possible on all depository accounts, including CDs and IRAs, to rates that are competitive in today’s interest rate environment (bank's FAQs)
  • Estimated Cost to Deposit Insurance Fund: $87.4 million
  • Enforcement Action: FDIC 9/18/09 C&D Order, 8/18/10 PCA Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 219.64% at DepositAccounts.com

17th Bank Failure of 2011 (2nd in Wisconsin)

  • FDIC Press Release
  • Closed Bank: Badger State Bank, Cassville, WI
  • Size: 1 branch, $83.8 million in assets, $78.5 million in deposits
  • Acquiring Bank: Royal Bank, Elroy, WI
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by Royal Bank
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $17.5 million
  • Enforcement Action: FDIC 4/30/09 C&D Order, 5/10/10 PCA Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 122.21% at DepositAccounts.com

18th Bank Failure of 2011 (1st in California)

  • FDIC Press Release
  • Closed Bank: Canyon National Bank, Palm Springs, CA
  • Size: 3 branches, $210.9 million in assets, $205.3 million in deposits
  • Acquiring Bank: Pacific Premier Bank, Costa Mesa, CA
  • Possible Uninsured Deposits: All deposit accounts, except those of Cede & Co, if any, have been assumed by Pacific Premier Bank
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $10.0 million
  • Enforcement Action: OCC 9/15/08 Written Agreement
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 329.24% at DepositAccounts.com

The above ratings are based on September 2010 data.

References:



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Comments
5 Comments.
Comment #1 by Joe (anonymous) posted on
Joe
Do you have any experience or review on American Express High Yield Savings accounts? The 1.30% rate is very attractive. Thanks.

1
Comment #3 by gcfp (anonymous) posted on
gcfp
i opened an account there 2 weeks ago,,totally by internet,,went smooth took 5 days to post transfer,,i think its a good rate since one can move account money to home checking account easily.

1
Comment #4 by OC Steve (anonymous) posted on
OC Steve
Was kinda of surprised that Pacific Premier Bank was going shopping for the bank failure in Palm Springs.  This bank has been paying very low rates for some time and why do they need more deposits, even though they paid no premium for them?  Makes no sense to me.


For some background, this bank used to be called "Life Bank" and made in the past many sub-prime home loans that almost killed the Bank prior to a re-capitalization and replacement of senior management.  Is there a second life for them? 

OC Steve

2
Comment #5 by opera ghost (anonymous) posted on
opera ghost
closing of another bank is florida comes as no surprise i am on holiday now in the sunshine state glad to be out of the ny cold and snow will try to report daily on my findings  happy valentines day to all any body heard from rhett lately welcome back shore break

1