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One Michigan Bank & One North Carolina Credit Union Closed by Regulators

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One Michigan bank was closed by regulators this Friday. That brings the total number of bank failures for 2012 to 16. Last year at this time there had been 26 bank failures.

Fidelity Bank in Dearborn was the first Michigan bank to be closed this year. Last year there were 2 Michigan banks that failed.

The FDIC arranged for Huntington National Bank to assume all deposits at Fidelity Bank. No one lost any money on deposit.

The only concern for depositors will be reduced CD rates. However, Huntington has announced in its FAQs the following:

Q. How will my CDs be affected?

A. The interest rate and maturity date on your CD will not change.

Because the FDIC insurance program worked to insure the safety of your deposits, you will have the option to close out your CD and withdraw your funds without penalty.

Not many acquiring banks choose to honor the existing CD rates of the failed banks. Out of the 92 banks that failed in 2011, only 4 of the acquiring banks announced at the time of the closures that they were going to honor the existing CD rates.

In addition to the bank closure, the NCUA liquidated a credit union on Monday. Shepherd’s Federal Credit Union in North Carolina was liquidated, and the NCUA did not find another credit union to acquire the failed credit union. Thus, the NCUA will "issue checks to members holding verified share accounts in the credit union within one week." It was a tiny credit union. According to the NCUA, it "served 1,397 members and had deposits of approximately $379,000." I think it's safe to say that no one had over $250,000 in deposits.

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

16th Bank Failure of 2012 (1st in Michigan)

  • Closed Bank: Fidelity Bank, Dearborn, MI
  • FDIC Press Release
  • Size: 15 branches, $818.2 million in assets and $747.6 million in deposits
  • Acquiring Bank: The Huntington National Bank, Columbus, OH
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, has been assumed by The Huntington National Bank
  • Rate Changes: The interest rate and maturity date on Fidelity Bank CDs will not change (Huntington FAQ)
  • Estimated Cost to Deposit Insurance Fund: $92.8 million
  • Enforcement Action: FDIC 2/12/10 Consent Order, FDIC 9/7/11 PCA
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 125.84% at DepositAccounts.com (see financial rating note)

4th Credit Union Liquidation of 2012 (Mar 26)

  • Liquidated CU: Shepherd’s Federal Credit Union of Charlotte, N.C.
  • NCUA Press Release
  • Size: 1,397 members and $379,000 in deposits
  • Acquiring CU: None

Financial Ratings Notes: 0 star is lowest at BauerFinancial, 1 star is lowest at DepositAccounts.com & Bankrate.com, Texas Ratios over 100% is considered at risk. Ratings are based on December 2011 data.

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