There was just one bank failure today which brings the total number of bank failures in 2011 to 26. The pace of bank failures have gone down quite a bit in March. So far in March there have only been 3 bank failures. Since this is the last Friday in March, we probably won't see any more failures for this month. As a comparison to last year at this time, there had been 19 bank failures in March and 41 for the year.
The failed Illinois bank, The Bank of Commerce, was small with just one office. Advantage National Bank Group, the bank that acquired The Bank of Commerce, agreed to assume all deposits including brokered deposits. However, it stated in its FAQs that it may not honor some existing CD rates. Here's the full text of this FAQ:
Will my personal Certificates of Deposit (CDs) change? Will the rates change prior to maturity?
Maybe. “Internet” or “brokered” CDs may be adjusted prior to maturity. However, unless you’re notified, rates will stay the same.
It's interesting to see internet CDs grouped with brokered CDs. We've seen this a few times in the last four months.
Another interesting thing to note about the closure of The Bank of Commerce is that a reader had given this bank a very negative review and rating in October. Here's an excerpt:
B.O.C. is the most poorly organized bank I have ever dealt with. I have worked with them regarding a number of commercial loans. They have no power or ability to make decisions any longer even at the bank President level.
The bank was operating under both a cease and desist order and a prompt correction action from the FDIC. In addition, it had very low financial ratings so the writing was on the wall for this bank.
Below is a summary of this bank failure:
26th Bank Failure of 2011 (3rd in Illinois)
- FDIC Press Release
- Closed Bank: The Bank of Commerce, Wood Dale, IL
- Size: 1 branch, $163.1 million in assets, $161.4 million in deposits
- Acquiring Bank: Advantage National Bank Group, Elk Grove Village, IL
- Possible Uninsured Deposits: All deposit accounts, including brokered deposits, have been assumed by Advantage National Bank Group
- Rate Changes: "Internet" or "brokered" CDs may be adjusted prior to maturity. However, unless you’re notified, rates will stay the same (from bank's FAQs)
- Estimated Cost to Deposit Insurance Fund: $41.9 million
- Enforcement Action: FDIC 5/27/09 C&D Order, FDIC 12/2/10 PCA
- Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 563.76% (poor) at DepositAccounts.com
The above DepositAccounts.com and BauerFinancial.com ratings are based on December 2010 data. Bankrate.com data is based on September 2010 data.