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Hometown Community Bank in Georgia is 50th Bank to Fail This Year

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There was just one bank that failed this Friday. It was Hometown Community Bank, a small community bank in Braselton, Georgia, about 30 miles northeast of Atlanta. This is the 50th bank to fail in the nation this year, and it's the 10th to fail in Georgia. At this time last year there had been 90 bank failures, and by this time in 2010 there had been 149 bank failures.

Hometown Community Bank's closure was typical with the FDIC arranging for another bank to assume all deposits. The FDIC had the following message in its Q&As:

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 CertusBank, N.A.

CD customers at Hometown Community Bank will have to wait to see what happens with the rates. CertusBank, which was the acquiring bank, had the following in its Q&A on its website:

We are in the process of evaluating the rates on our interest bearing deposit accounts. If a decision to change rates is made, we will advise you in advance of the changes.

There were no credit unions that failed this week. The total number of credit union failures for the year remains at 11. One of those 11 was privately insured by the ASI.

Bank Regulators Including the FDIC Release Stress Test Scenarios

In related news, the FDIC "released the economic scenarios that will be used by certain financial institutions with total consolidated assets of more than $10 billion for the upcoming round of stress tests required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010." The Federal Reserve also released scenarios that will be used in the next round of stress tests for 19 large financial institutions.

These stress tests won't be impacting the small banks. So far this year I don't think there has been any bank with over $10 billion in assets that has failed. In fact, most of the failed banks have had assets under $1 billion.

Below is the summary of today's bank failure:

50th Bank Failure of 2012 (10th in Georgia)

  • Closed Bank: Hometown Community Bank, Braselton, GA
  • FDIC Press Release
  • Size: 2 branches, $124.6 million in assets and $108.9 million in deposits
  • Acquiring Bank: CertusBank, N.A., Easley, SC
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, has been assumed by CertusBank, N.A. (FDIC Q&A)
  • Rate Changes: Hometown Community Bank's rates will be reviewed by CertusBank, N.A. and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $36.7 million
  • Enforcement Action: FDIC 4/6/12 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 427.22% 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 June 30, 2012 data.

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