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Security Bank, N.A. in Florida is 23rd Bank Failure This Year

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Only one bank failed this Friday which is quite a bit less than last Friday when 5 banks failed. That brings the number of bank failures for the year to 23. At this time last year there had been 40 bank failures.

The failed bank was Security Bank, N.A. which was based in Florida. That's the third bank failure in Florida this year. Only Georgia has more bank failures this year with 4.

Security Bank's closure was typical with the FDIC arranging for another bank to assume all 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, Banesco USA, has posted a FAQ regarding CD changes:

We are in the process of evaluating the rates on our interest-bearing deposit accounts. If your certificate of deposit rates are affected by a rate change as of May 4, 2012, you will receive a "Notice of Rate Changes to Interest-Bearing Deposits" in the mail advising you of the change. Please read the document carefully.

Interest rates and annual percentage yields on checking, savings and money market accounts are subject to change at any time.

You can withdraw some or all of your funds from your deposit accounts without penalty until you enter into a new agreement with Banesco USA, provided that you are not using your deposits to secure a loan.

If you currently receive interest payments, those payments will continue without interruption.

Unfortunately, this answer suggests that the bank may lower the CD rates and make the rate cuts effective on the closure date. Acquiring banks do have the right to lower CD rates and make those lower rates effective the day after the closure. The problem with this is that it can take a week or more for the CD holders to be notified. In my opinion, the effective date of the rate cut should be no sooner than two weeks after the bank mails the notifications.

There have been no credit union liquidations since March 26th when Shepherd’s Federal Credit Union in North Carolina became the fourth credit union closed in 2012.

Below is the summary of today's bank failure:

23rd Bank Failure of 2012 (3rd in Florida)

  • Closed Bank: Security Bank, N.A., North Lauderdale, FL
  • FDIC Press Release
  • Size: 3 branches, $101.0 million in assets and $99.1 million in deposits
  • Acquiring Bank: Banesco USA, Coral Gables, FL
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by Banesco USA
  • Rate Changes: Security Bank N.A.'s rates will be reviewed by the new bank and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $10.8 million
  • Enforcement Action: OCC 5/19/10 Consent Order, OCC 3/23/12 PCA
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 290.93% 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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