Fourth Bank Failure of the Year: Frontier Bank, LaGrange, Georgia

The pace of bank failures continues to decline. In previous years it was rare when there was a Friday without a bank failure. In fact, for most Fridays, multiple banks were closed. So far this year, it's now more common to have a Friday without a bank failure. But that wasn't the case today. One small Georgia bank failed. That's the fourth bank to fail this year, and the first in Georgia. At this time last year, there had been 13 bank failures in the nation and three in Georgia.

The closure of Frontier 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 HeritageBank of the South.

CD customers at Frontier 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 on March 8, 2013 will be paid at your same rate. Frontier Bank's rates will be reviewed by HeritageBank of the South 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 HeritageBank of the South.

One tiny credit union failed on February 19th. That was Amez United Credit Union of Detroit, Michigan. It had less than $200K in assets and only 158 members. The NCUA was not able to arrange for another credit union to assume deposits. Thus, the NCUA mailed checks to individuals holding verified share accounts.

Below is the summary of the today's bank failure and last month's credit union liquidation:

4th Bank Failure of 2013 (1st in Georgia)

• Closed Bank: Frontier Bank, LaGrange, GA
• FDIC Press Release
• Size: 9 branches, $258.8 million in assets and $224.1 million in deposits
• Acquiring Bank: HeritageBank of the South, Albany, GA
• Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by HeritageBank of the South (FDIC Q&A)
• Rate Changes: Frontier Bank's rates will be reviewed by HeritageBank of the South and may be lowered (FDIC Q&A)
• Estimated Cost to Deposit Insurance Fund: $51.6 million
• Enforcement Action: FDIC 2/15/12 Consent Order
• Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 616.55% at DepositAccounts.com (see financial rating note)

2nd Credit Union Liquidated in 2013 (Feb 19)

• CU placed into conservatorship: Amez United Credit Union, Detroit, Michigan
• NCUA Press Release
• Size: $168,865 in assets, 158 members

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 Bankrate.com are based on September 30, 2012 data. Ratings at BauerFinancial are based on December 31, 2012 data.

References:

• FDIC list of failed banks
• Texas Ratios for banks and credit unions
• Latest FDIC info on deposit insurance
• My bank failure review posts
• Review of the 2012 bank and credit union failures
• Review of the 2011 bank and credit union failures
• Review of the 2010 bank and credit union failures
• 10 Lessons from the 2008 bank failures