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One Bank Failure and One Credit Union Placed Into Conservatorship

POSTED ON BY

After two straight Fridays with 4 bank failures, this Friday was quiet in comparison. Only one bank failed. The very small bank, All American Bank, was closed by Illinois regulators. That raises the number of 2011 bank failures to 85. At this time last year there had been 139 bank failures for 2010.

Update 10/31/2011: Note, this failed All American Bank of Des Plaines, Illinois has no relation to All American Bank of Oklahoma City which operates AmericaNet Bank.

The failed bank, All American Bank, is the ninth bank to fail in Illinois this year. Illinois remains in third place for the most 2011 bank failures. Georgia is far out in front with 22 bank failures, and Florida is in second with 12 bank failures.

The FDIC arranged for International Bank of Chicago to assume all deposits of All American Bank. This includes brokered deposits. Consequently, no depositor lost any money even if they had over the FDIC limit.

The only question for All American Bank depositors will be on what will happen to their CDs. The FDIC just has its typical answer on this question:

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 enter into a new deposit agreement.

International Bank of Chicago doesn't have any news on this acquisition on its website. Thus, it's not currently known what will happen to All American Bank CDs. However, International Bank of Chicago has maintained some competitive CD rates. I had reviewed its CDs 10 days ago. Hopefully, that will improve the odds that there won't be major CD rate cuts.

There weren't any credit union liquidations this week. However, the NCUA did place one tiny Alabama credit union into conservatorship.

No deposits are affected when a credit union is placed into conservatorship. However, if the NCUA determines that the credit union can't be saved, it will be liquidated. Consequently, members who find their credit union placed into conservatorship should immediately ensure that all of their deposits are below the NCUA deposit coverage limits.

So far this year there have been 12 credit union liquidations and 11 credit unions that have been placed into conservatorships.

Below is the summary of Friday's bank failure and credit union conservatorship

85th Bank Failure of 2011 (9th in Illinois)

  • FDIC Press Release
  • Closed Bank: All American Bank, Des Plaines, IL
  • Size: 1 branch, $37.8 million in assets, $33.4 million in deposits
  • Acquiring Bank: International Bank of Chicago, Chicago, IL
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, has been assumed by International Bank of Chicago
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $6.5 million
  • Enforcement Action: FDIC 3/13/10 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 219.25% at DepositAccounts.com (see financial rating note)
11th Credit Union Conservatorship of 2011 (Oct 27)
  • NCUA Press Release
  • CU placed into conservatorship: Birmingham Financial Federal Credit Union, Birmingham, AL
  • Size: $1.3 million in assets and serves 429 members
  • Financial Ratings: 1 stars at Bankrate.com, Not rated at BauerFinancial, 3 stars & Texas Ratio of 97.51% at DepositAccounts.com (see financial rating 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 June 2011 data.

References:



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Comments
2 Comments.
Comment #1 by Sandra posted on
Sandra
Probably should point out that "All American Bank" is not connected to "All America Bank", wnich operates AmericaNetBank.com .

1
Comment #2 by KenBDG posted on
KenBDG
Thanks for pointing this out. I've updated the post with this note.

1