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One Bank and One Credit Union Closed by Regulators

POSTED ON BY

After a holiday break, the FDIC is back in action this Friday. Westside Community Bank was closed by Washington State regulators. The FDIC entered into a purchase and assumption agreement with Sunwest Bank of Irvine, California, to assume all of the deposits. This is the first bank failure of 2013. Last year the first bank failures didn't occur until January 20th. This is the first Washington State bank failure since August 2011 when Bank of Whitman failed.

The closure of Westside Community Bank 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 Sunwest Bank.

CD customers at Westside Community Bank will have to wait to see what happens with the rates. The FDIC has its typical message about interest rates in its Q&As:

Interest on deposits accrued through close of business January 11, 2013 will be paid at your same rate. Westside Community Bank's rates will be reviewed by Sunwest 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 Sunwest Bank.

The first credit union failure of 2013 was announced by the NCUA on January 7th. The failed credit union was New Covenant Missionary Baptist Church Credit Union of Milwaukee, Wisconsin, and it was a tiny credit union with only 294 members and $585,000 in assets. The NCUA did not find another credit union to assume members' deposits, so checks will be mailed for the insured deposits.

Below is the summary of the recent bank and credit union failures:

1st Bank Failure of 2013 (1st in Washington State)

  • Closed Bank: Westside Community Bank, University Place, WA
  • FDIC Press Release
  • Size: 2 branches, $97.7 million in assets and $96.5 million in deposits
  • Acquiring Bank: Sunwest Bank, Irvine, CA
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by Sunwest Bank (FDIC Q&A)
  • Rate Changes: Westside Community Bank's rates will be reviewed by Sunwest Bank and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $20.3 million
  • Enforcement Action: FDIC 9/24/10 consent order, FDIC 6/5/12 PCA
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 962.56% at DepositAccounts.com (see financial rating note)

1st Credit Union Liquidation of 2013 (Jan 7th)

  • Liquidated CU: New Covenant Missionary Baptist Church Credit Union of Milwaukee, WI
  • NCUA Press Release
  • Size: 294 members and had assets of approximately $585,000
  • Acquiring CU: None

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 September 30, 2012. Ratings at Bankrate.com are based on June 30, 2012 data.

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