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Five Banks and One Credit Union Closed by Regulators - Update

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Five Banks and One Credit Union Closed by Regulators - Update

The FDIC was back in action after taking last Friday off. Five banks were closed which brings the total number of bank failures for the year to 39. Compared to last year at this time the total number of bank failures was 64.

Georgia continues to be the state with the most 2011 bank failures. Two of the five bank failures today were in Georgia which brings its total number of failures for this year to 10. Another two of the five bank failures were in Florida which brings its total number of failures for the year to four. Florida had the most bank failures last year, but it's far behind Georgia this year. The fifth bank failure today was in Michigan.

All five of the failed banks were small. The largest was The Park Avenue Bank in Valdosta, Georgia which had $953.3 million in assets.

The FDIC arranged for other banks to acquire all five failed banks. Premier American Bank, N.A. in Miami acquired both of the failed Florida banks, and Bank of the Ozarks in Arkansas acquired both of the failed Georgia banks. Talmer Bank acquired the failed Michigan bank.

For all of the five closures, all deposits were assumed by the acquiring banks except some brokered deposits. As has been common, no one with regular deposits lost any money even those who had over the FDIC limit.

One interesting thing to note is that Bank of the Ozarks and Talmer Bank mentioned on their website FAQs that the rates of the CDs from the failed banks would be lowered. Bank of the Ozarks stated the following:

Rates on certain CD accounts and IRA accounts will be adjusted to current market rates. We will notify you by U.S. mail of any changes to interest rates paid on time deposit accounts.

Talmer Bank's FAQ was similar:

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 effective May 20, 2011 on all depository accounts, including Certificates of Deposit and IRAs, to rates that are competitive in today’s interest rate environment.

At least Talmer Bank is waiting for about 3 weeks before implementing the rate cuts. Customers should have enough time to make an early withdrawal (without a penalty) if the new rates are not competitive. Banks are allowed to make rate adjustments on the day after the closures, but in my opinion, it's more honorable when the banks inform customers of the rate changes before they implement them.

Credit Union Closure

In addition to the five bank closures, the NCUA liquidated a credit union today. Utah Central Credit Union was closed, and the NCUA arranged for Chartway Federal Credit Union to assume all deposits. Utah Central Credit Union was a sizable credit union with $157 million in assets and 22,000 members. That brings the total number of credit union liquidations for the year to seven. At this time last year there had been six credit union liquidations.

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

35th Bank Failure of 2011 (3rd in Florida)

  • FDIC Press Release
  • Closed Bank: First National Bank of Central Florida, Winter Park, FL
  • Size: 6 branches, $352.0 million in assets, $312.1 million in deposits
  • Acquiring Bank: Premier American Bank, N.A., Miami, FL
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by Florida Community Bank
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered (FDIC)
  • Estimated Cost to Deposit Insurance Fund: $42.9 million
  • Enforcement Action: OCC 7/7/09 Agreement, OCC 10/13/10 Capital Directive
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 493.31% at DepositAccounts.com (see financial rating note)

36th Bank Failure of 2011 (4th in Florida)

  • FDIC Press Release
  • Closed Bank: Cortez Community Bank, Brooksville, FL
  • Size: 2 branches, $70.9 million in assets, $61.4 million in deposits
  • Acquiring Bank: Premier American Bank, N.A., Miami, FL
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by the new bank
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered (FDIC)
  • Estimated Cost to Deposit Insurance Fund: $18.6 million
  • Enforcement Action: FDIC 4/5/10 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 2 stars & Texas Ratio of 394.72% at DepositAccounts.com (see financial rating note)

37th Bank Failure of 2011 (9th in Georgia)

  • FDIC Press Release
  • Closed Bank: First Choice Community Bank, Dallas, GA
  • Size: 7 branches, $308.5 million in assets, $310.0 million in deposits
  • Acquiring Bank: Bank of the Ozarks, Little Rock, AR
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by Bank of the Ozarks
  • Rate Changes: Rates on certain CD accounts and IRA accounts will be adjusted to current market rates (Bank's FAQs)
  • Estimated Cost to Deposit Insurance Fund: $92.4 million
  • Enforcement Action: No public enforcement action
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 2 stars & Texas Ratio of 869.06% at DepositAccounts.com (see financial rating note)

38th Bank Failure of 2011 (10th in Georgia)

  • FDIC Press Release
  • Closed Bank: The Park Avenue Bank, Valdosta, GA
  • Size: 11 branches, $953.3 million in assets, $827.7 million in deposits
  • Acquiring Bank: Bank of the Ozarks, Little Rock, AR
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by Bank of the Ozarks
  • Rate Changes: Rates on certain CD accounts and IRA accounts will be adjusted to current market rates (Bank's FAQs)
  • Estimated Cost to Deposit Insurance Fund: $306.1 million
  • Enforcement Action: Federal Reserve 7/14/09 Written Agreement, Federal Reserve 12/13/10 PCA
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 399.91% at DepositAccounts.com (see financial rating note)

39th Bank Failure of 2011 (2nd in Michigan)

  • FDIC Press Release
  • Closed Bank: Community Central Bank, Mount Clemens, MI
  • Size: 4 branches, $476.3 million in assets, $385.4 million in deposits
  • Acquiring Bank: Talmer Bank & Trust (formerly known as First Michigan Bank), Troy, MI
  • Possible Uninsured Deposits: all deposit accounts, excluding Cede & Co. deposits, have been assumed by Talmer Bank & Trust
  • Rate Changes: Interest rates will be adjusted effective May 20, 2011 on all depository accounts, including Certificates of Deposit and IRAs, to rates that are competitive in today’s interest rate environment (Bank's FAQs)
  • Estimated Cost to Deposit Insurance Fund: $183.2 million
  • Enforcement Action: FDIC 11/1/10 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 2 stars & Texas Ratio of 185.91% at DepositAccounts.com (see financial rating note)

7th Credit Union Liquidation of 2011 (April 29th)

  • NCUA Press Release
  • Liquidated CU: Utah Central Credit Union of Salt Lake City
  • Size: $157 million in assets and served 22,000 members
  • Acquiring CU: Chartway Federal Credit Union
  • Financial Ratings: 1 star at Bankrate.com, 0 stars at BauerFinancial, 1 star at DepositAccounts.com and Texas Ratio of 319.13% (see financial ratings note)

Financial Ratings Notes: 0 star is lowest at BauerFinancial, 1 star is lowest at Bankrate.com & DepositAccounts.com, Texas Ratios over 100% is considered at risk. Ratings are based on December 2010 data.

References:

Edit 4/30/11: Some minor improvements in the wording



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