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Six Banks Closed and Two Credit Unions Placed into Conservatorship

POSTED ON BY

We had the most bank failures this Friday than any other day this year. It appeared April was going to be as slow as March in terms of bank failures, but that changed today. Six banks failed today which brings the total number of bank failures for 2011 to 34. At this time last year there had been 50 bank failures.

Most of the banks that have failed this year have been small. Before today, there had been only two failed banks with assets over $1 billion. Another one was added today. Superior Bank in Alabama had $3.0 billion in assets and 73 branches. That's the largest bank failure this year.

Two of the banks that failed today were in Georgia which brings the number of failures in Georgia this year to 8. Like in 2009, Georgia now leads all other states with bank failures. In 2010, Florida surpassed Georgia.

Of the four remaining failed banks, two were in Alabama, one in Minnesota and one in Mississippi.

The FDIC arranged for other banks to acquire all six failed banks, and 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. Also as has been common, the FDIC didn't give any indication about interest rate changes. The acquiring banks may decide to change the rates on existing CDs from the failed banks.

There were a few interesting things I noticed about today's bank failures:

  • Bartow County Bank in Georgia, the first bank to fail today, had a reward checking account. Its yield fell from 3.01% to 0.84% in April 2010. This was probably due to the bank receiving the status of less than well capitalized which allows the FDIC to enforce rate caps.
  • Nexity Bank in Alabama, the third bank to fail today, was primarily an internet bank which offered savings, checking accounts and CDs online. It often had competitive CD rates. The best recent CD rate was a 1.07% APY 6-month CD
  • The two Alabama failed banks were acquired by newly chartered banks.

Credit Union Conservatorships

In addition to the six bank failures, two credit unions were placed into conservatorship by the NCUA. Unlike the FDIC, the NCUA often places credit unions into conservatorship instead of closing the credit unions. In a conservatorship, the NCUA takes over management of the credit union. If the NCUA is unable to put the credit union back into adequate financial shape, it will often liquidate the credit union and have another credit union take over.

Many of the problem credit unions this year have been very small. That was the case with one of these two credit unions. However, the other one was large. It was Texans Credit Union which has $1.6 billion in assets.

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

29th Bank Failure of 2011 (7th in Georgia)

  • FDIC Press Release
  • Closed Bank: Bartow County Bank, Cartersville, GA
  • Size: 4 branches, $330.2 million in assets, $304.1 million in deposits
  • Acquiring Bank: Hamilton State Bank, Hoschton, GA
  • Possible Uninsured Deposits: All deposit accounts, including brokered deposits, have been assumed by Hamilton State Bank
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $69.5 million
  • Enforcement Action: FDIC 4/5/10 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 637.65% at DepositAccounts.com (see note)

30th Bank Failure of 2011 (8th in Georgia)

  • FDIC Press Release
  • Closed Bank: New Horizons Bank, East Ellijay, GA
  • Size: 1 branch, $110.7 million in assets, $106.1 million in deposits
  • Acquiring Bank: Citizens South Bank, Gastonia, NC
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, has been assumed by Citizens South Bank
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $30.9 million
  • Enforcement Action: No public enforcement action
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 397.70% at DepositAccounts.com (see note)

31st Bank Failure of 2011 (1st in Alabama)

  • FDIC Press Release
  • Closed Bank: Nexity Bank, Birmingham, AL
  • Size: 1 branch, $793.7 million in assets, $637.8 million in deposits
  • Acquiring Bank: AloStar Bank of Commerce, Birmingham, AL, a newly-chartered bank
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by AloStar Bank of Commerce
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $175.4 million
  • Enforcement Action: FDIC 3/20/09 C&D Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 943.27% at DepositAccounts.com (see note)

32nd Bank Failure of 2011 (2nd in Alabama)

  • FDIC Press Release
  • Closed Bank: Superior Bank, Birmingham, AL
  • Size: 73 branches, $3.0 billion in assets, $2.7 billion in deposits
  • Acquiring Bank: Superior Bank, N.A., Birmingham, AL, a newly-chartered bank subsidiary of Community Bancorp LLC, Houston, TX
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by Superior Bank, N.A.
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $259.6 million
  • Enforcement Action: No public enforcement action
  • Financial Ratings: ? stars at Bankrate.com, ? stars at BauerFinancial, 2 star & Texas Ratio of 315.04% at DepositAccounts.com (see note)

33rd Bank Failure of 2011 (1st in Minnesota)

  • FDIC Press Release
  • Closed Bank: Rosemount National Bank, Rosemount, MN
  • Size: 1 branch, $37.6 million in assets, $36.6 million in deposits
  • Acquiring Bank: Central Bank, Stillwater, MN
  • Possible Uninsured Deposits: All deposit accounts, including brokered deposits, have been assumed by Central Bank
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $3.6 million
  • Enforcement Action: OCC 4/28/10 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 2 stars & Texas Ratio of 205.27% at DepositAccounts.com (see note)

34th Bank Failure of 2011 (1st in Mississippi)

  • FDIC Press Release
  • Closed Bank: Heritage Banking Group, Carthage, MS
  • Size: 8 branches, $224.0 million in assets, $196.2 million in deposits
  • Acquiring Bank: Trustmark National Bank, Jackson, MS
  • Possible Uninsured Deposits: All deposit accounts, including brokered deposits, have been assumed by Trustmark National Bank
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $49.1 million
  • Enforcement Action: FDIC 6/4/10 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 266.20% at DepositAccounts.com (see note)

2nd Credit Union Conservatorship of 2011 (April 15th)

  • NCUA Press Release
  • CU placed into conservatorship: Vensure Federal Credit Union of Mesa, Arizona
  • Size: $4.7 million in assets and served 144 members
  • Financial Ratings: 5 stars at Bankrate.com, 4 stars at BauerFinancial, ? stars at DepositAccounts.com (see note)

3rd Credit Union Conservatorship of 2011 (April 15th)

  • NCUA Press Release
  • CU placed into conservatorship: Texans Credit Union of Richardson, Texas
  • Size: $1.6 billion in assets and served 133,000 members
  • Financial Ratings: 1 stars at Bankrate.com, 0 star at BauerFinancial, 2 star & Texas Ratio of 165.09% at DepositAccounts.com (see 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 4/16/2011: Added notes to the financial ratings.


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Comments
3 comments.
Comment #1 by lou posted on
lou
I noticed that the credit union in Arizona had 5 stars at Bankrate and 4 stars at Bauer. I guessed they completely missed this one. Sure doesn't inspire confidence in their ratings.

7
Comment #2 by KenBDG posted on
KenBDG
This was a very small credit union (only 144 members). It seems that these tiny institutions are more susceptible to management issues or rapid financial deterioration which are not always seen in the ratings.

7
Comment #3 by Jill (anonymous) posted on
Jill
I think it would be informative to include statistics of employees, members, and possibly their ratios, where they are available in banks/CUs overview page. A lot of them are missing. Lately I've been looking at different places to put my savings in as my local CU is paying almost no interest, and seeing health ratings and APY history is very useful, but I would appreciate to also know how many other people bank there.

4