One Small Georgia Bank Closed by Regulators

Just one bank failed this Friday. That brings the 2012 tally of bank failures to 12. Last year at this time there had been 23 bank failures.

This was another Georgia bank failure. Global Commerce Bank was the third Georgia bank to fail this year, and that puts Georgia in the lead with the most 2012 bank failures. Last year Georgia had 23 bank failures which far exceeded the number of bank failures of any other state.

This bank failure was typical. All deposits were assumed by another bank so no depositors will lose any money, including those who had deposits over the FDIC coverage limit. As we learned last week, banks can still fail without the FDIC finding a buyer. Those are the cases where the $250K insurance coverage limit comes into play.

For bank failures with acquisitions, the main concern for depositors will be rate cuts on CDs. The acquiring bank, Metro City Bank, just has the typical FDIC note about rate changes on its website:

Interest on deposits accrued through close of business on March 2, 2012 will be paid at your same rate. Global Commerce Bank's rates will be reviewed by the new bank and may be lowered; however, you will be notified in writing of any changes. You may withdraw funds from any transferred account, regardless of whether your interest rate changes, without early withdrawal penalty until you enter into a new deposit agreement with the new bank.

Below is the summary of Friday's bank failure.

• Closed Bank: Global Commerce Bank, Doraville, GA
• FDIC Press Release
• Size: 3 branches, $143.7 million in assets and $116.8 million in deposits
• Acquiring Bank: Metro City Bank, Doraville, GA
• Possible Uninsured Deposits: all deposit accounts, including brokered deposits, has been assumed by Metro City Bank
• Rate Changes: Global Commerce Bank's rates will be reviewed by the new bank and may be lowered (FDIC's Q&A)
• Estimated Cost to Deposit Insurance Fund: $17.9 million
• Enforcement Action: None that were public
• Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 574.56% 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 at DepositAccounts.com are based on December 2011 data. Others are based on September 2011 data.

References:

• FDIC list of failed banks
• Texas Ratios for banks and credit unions
• Latest FDIC info on deposit insurance
• My bank failure review posts
• Review of the 2011 bank and credit union failures
• Review of the 2010 bank and credit union failures
• 10 Lessons from the 2008 bank failures