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An Alabama Bank and a Wisconsin Credit Union Closed by Regulators

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An Alabama Bank and a Wisconsin Credit Union Closed by Regulators

The FDIC was back in action this Friday with one bank closure. Alabama Trust Bank was closed by the OCC. This is the first bank failure of the year in Alabama and the 24th bank failure of the year in the nation. At this time last year there had been 43 bank failures for the year, and at this time in 2010 there had been 73 bank failures.

Alabama Trust Bank closure was typical with the FDIC arranging for another bank to assume all regular deposits, even deposits over the insurance limits. So no depositor lost any money. Only depositors with CDs need to be worried. The new bank may decide to reduce their CD rates. The acquiring bank, Southern States Bank, hasn't disclosed its plans for changing the CD rates. The FDIC FAQ just has the typical message:

Interest on deposits accrued through close of business on May 18, 2012 will be paid at your same rate. Alabama Trust Bank, N.A.'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.

There was also a credit union liquidation this Friday. The tiny credit union, Wausau Postal Employees Credit Union, was closed by Wisconsin regulators. The NCUA arranged for CoVantage Credit Union to purchase and assume Wausau Postal Employees Credit Union’s assets, liabilities, and membership. This is the fifth credit union closed in 2012.

One interesting thing to note is the financial ratings of Wausau Postal Employees Credit Union. Our system at DepositAccounts.com had given it 3 stars (out of 5). Bauer Financial also had given it 3 stars. Bankrate.com had given it 2 stars. This shows that financial ratings are often not useful for tiny credit unions with assets under $10 million.

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

24th Bank Failure of 2012 (1st in Alabama)

  • Closed Bank: Alabama Trust Bank, N.A., Sylacauga, AL
  • FDIC Press Release
  • Size: 1 branch, $51.6 million in assets and $45.1 million in deposits
  • Acquiring Bank: Southern States Bank, Anniston, AL
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. deposits, have been assumed by Southern States Bank
  • Rate Changes: Alabama Trust Bank, N.A.'s rates will be reviewed by the new bank and may be lowered; however, you will be notified in writing of any changes (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $8.9 million
  • Enforcement Action: OCC 12/17/10 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 194.68% at DepositAccounts.com (see financial rating note)

5th Credit Union Liquidation of 2012 (May 18)

  • Liquidated CU: Wausau Postal Employees Credit Union, Wausau, WI
  • NCUA Press Release
  • Size: 845 members and $8.4 million in assets
  • Acquiring CU: CoVantage Credit Union, Antigo, WI
  • Financial Ratings: 2 stars at Bankrate.com, 3 stars at BauerFinancial, 3 stars & Texas Ratio of 34.91% at DepositAccounts.com (see financial rating note)

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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