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43rd Bank Failure of the Year: First United Bank in Illinois

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43rd Bank Failure of the Year: First United Bank in Illinois

One small Illinois bank failed this Friday. First United Bank was closed by state regulators, and the FDIC arranged for Old Plank Trail Community Bank, N.A. to assume all of the failed bank's deposits.

This was the third bank to fail this month, the 12th bank to fail this quarter and the 43rd bank to fail this year. 8 of those 12 bank failures in this quarter occurred in July. Since July 20th, there have been only 5 bank failures. As you can see, the pace of bank closures has slowed considerably.

At this time last year there had been 74 bank failures, and at this time in 2010 there had been 129 bank failures.

Old Plank Trail Community Bank, N.A. assumed all of the deposits of First United Bank. The FDIC has the following message at its Q&A page:

No one lost any money on deposit as a result of the closure of this bank. All deposits, regardless of dollar amount, were transferred to Old Plank Trail Community Bank, N.A.

Old Plank Trail Community Bank, N.A. provided an FAQ page on its website. One Q&A specifically covered changes to CD rates:

Will my personal Certificates of Deposit (CDs) change? Will the rates change prior to maturity?

For local personal and IRA CDs, the simple answer is NO. These CDs will remain the same until maturity and automatically renew at the Old Plank Trail Community Bank, N.A. posted rates in effect at maturity. Some CDs, such as “Internet CDs,” may be adjusted. Unless you’re notified, rates will stay the same.

It's interesting to see that the bank is differentiating local CDs and internet CDs. I don't remember this bank offering internet CDs. There have been a few cases in the past in which the acquiring banks followed a similar policy. They may see the internet CD rates as too high, or they may not see the benefit in keeping relationships with the internet CD customers.

There were no credit union liquidations this week. The number of credit union liquidations for the year remain at 9. The last closure took place on August 9th.

Below is the summary of today's bank failure:

43rd Bank Failure of 2012 (7th in Illinois)

  • Closed Bank: First United Bank, Crete, IL
  • FDIC Press Release
  • Size: 5 branches, $328.4 million in assets and $316.9 million in deposits
  • Acquiring Bank: Old Plank Trail Community Bank, N.A., New Lenox, IL
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by Old Plank Trail Community Bank, N.A. (FDIC Q&A)
  • Rate Changes: Some CDs, such as “Internet CDs,” may be adjusted (new bank's Q&A)
  • Estimated Cost to Deposit Insurance Fund: $48.6 million
  • Enforcement Action: FDIC 3/4/10 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 204.63% 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 at DepositAccounts.com and BauerFinancial are based on June 30, 2012 data. Ratings at Bankrate.com are based on March 31, 2012 data.

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