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Regulators Close Two Small Banks in Oklahoma and Wisconsin

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The FDIC was back in action on Friday with two bank closures in Oklahoma and Wisconsin. Both were small banks with each having just one branch. This brings the total number of bank failures in 2011 to 25. As a comparison to last year at this time, 30 banks had failed.

For both closures, the FDIC arranged for other banks to assume all deposits except some brokered deposits. The new banks haven't mentioned what will happen to the rates of existing CDs. The FDIC has the typical message in its Q&As:

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 new bank and may be lowered; however, you may withdraw funds from any transferred account without early withdrawal penalty until you renew your Certificate of Deposit.

The closure of the Oklahoma bank, The First National Bank of Davis, was interesting for a couple of reasons. First, its financial ratings were fairly strong. It had 4 stars at Bankrate, 3½ stars at BauerFinancial and 4 stars based on our own ratings at DepositAccounts.com with an average Texas Ratio of 25.70%. The Texas Ratio was far under 100% which is considered at risk. Also, there wasn't a public enforcement action against the bank.

Another interesting thing to note about The First National Bank of Davis was that its president was removed from his post a week before its closure. The bank's primary regulator, the OCC, gave the following brief reason for the closure:

The OCC acted after finding that the bank had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices. The OCC also found that the bank incurred losses that depleted its capital and there is no reasonable prospect that the bank will become adequately capitalized without Federal assistance.

The acquiring bank agreed to purchase less than a third of the $90 million in assets. It was also interesting to see them pay a premium to assume all of the deposits:

In addition to paying a premium of 7.5% to assume all of the deposits of the failed bank, The Pauls Valley National Bank agreed to purchase approximately $28.5 million of The First National Bank of Davis' assets. The FDIC will retain the remaining assets for later disposition.

For the other failed bank, Legacy Bank in Milwaukee, Wisconsin, this was a more typical failure. All had low ratings for this bank. Legacy had been offering some high CD rates last year. Those who had opened accounts at Legacy for the high rates will likely be disappointed with the acquiring bank, Seaway Bank and Trust Company. Its 1-year CD rate is only 0.50%. There is some more news about Legacy Bank and its history in this WISN Milwaukee news article.

Credit Union Liquidation

In addition to the bank failure, there was one credit union liquidation this week. This brings the number of credit union liquidations this year to 5. It was a small credit union in New Mexico with only $8.6 million in assets. The NCUA was able to find another credit union to purchase and assume the failed credit union's assets, liabilities and members.

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

24th Bank Failure of 2011 (2nd in Oklahoma)

  • FDIC Press Release
  • Closed Bank: The First National Bank of Davis, Davis, OK
  • Size: 1 branch, $90.2 million in assets, $68.3 million in deposits
  • Acquiring Bank: The Pauls Valley National Bank, Pauls Valley, OK
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by The Pauls Valley National Bank
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $26.5 million
  • Enforcement Action: None that were public
  • Financial Ratings: 4 stars at Bankrate.com, 3½ stars at BauerFinancial, 4 star & Texas Ratio of 25.70% (average) at DepositAccounts.com

25th Bank Failure of 2011 (3rd in Wisconsin)

  • FDIC Press Release
  • Closed Bank: Legacy Bank, Milwaukee, WI
  • Size: 1 branch, $190.4 million in assets, $183.3 million in deposits
  • Acquiring Bank: Seaway Bank and Trust Company, Chicago, IL
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits have been assumed by Seaway Bank and Trust Company
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $43.5 million
  • Enforcement Action: Federal Reserve 4/27/10 Written Agreement, Federal Reserve 11/16/10 PCA
  • Financial Ratings: 1 star at Bankrate.com, 0 stars at BauerFinancial, 2 stars & Texas Ratio of 190.19% (poor) at DepositAccounts.com

4th Credit Union Liquidation of 2011 (March 4)

  • NCUA Press Release
  • Liquidated CU: Wisconsin Heights Credit Union of Ogema, Wisconsin
  • Size: $713,000 in assets and served 501 members
  • Acquiring CU: CoVantage Credit Union of Antigo, WI
  • Financial Ratings: 3 stars at Bankrate.com, ? stars at BauerFinancial

5th Credit Union Liquidation of 2011 (March 7)

  • NCUA Press Release
  • Liquidated CU: Land of Enchantment Federal Credit Union of Santa Fe, NM
  • Size: $8.6 million in assets and served 1,593 members
  • Acquiring CU: Guadalupe Credit Union of Santa Fe, NM
  • Financial Ratings: 2 stars at Bankrate.com, ? stars at BauerFinancial

The above DepositAccounts.com and BauerFinancial.com ratings are based on December 2010 data. Bankrate.com data is based on September 2010 data. Thanks to reader brandon2 who mentioned the Bauer star ratings in the discussion forum.

References:



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Comments
1 Comments.


Comment #2 by ron (anonymous) posted on
ron
the aquiring bank for legacy bank is seaway bank located in chicago i had an e-mail from my inquiry if they were going to leave the legacy cd's alone or change the rates i was informed by Trenette Robinson in this following e-mail from her as follows

Good Afternoon Ronald,

 

In response to your email, your Legacy CD’s will retain the stated rate.  Currently Seaway Bank has no plans of changing the rates.  If you are interested in transferring the funds or have any other questions regarding your account(s), please contact the Milwaukee Branch at 414/343-6900 to speak with Barb Ford or any Customer Service Rep. 

 

Thank you for your business and have a good evening.

 

Trenette Robinson

Executive Assistant

Seaway Bank and Trust Company

645 E. 87th Street

Chicago, IL 60619

773/602-4152

 hope this is of help to those who can't seem to get a clear answer about their legacy cd's

2