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Fifth Bank Failure of the Year: Gold Canyon Bank in Arizona

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One small Arizona bank was closed today by state regulators. This is the first bank failure since one month ago, and it's the fifth bank to fail in the country this year. Friday bank failures are not nearly as common as they were in previous years. At this time last year there had already been 16 bank failures, and at this time in 2011, there had been 26 bank failures.

The failed Arizona bank was Gold Canyon Bank. The 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 First Scottsdale Bank, N.A., which will continue to operate these branches under the name of Gold Canyon Bank.

CD customers at Gold Canyon 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 Friday, April 5, 2013, will be paid at your same rate. Golden Canyon Bank's rates will be reviewed by First Scottsdale Bank, N.A. 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 First Scottsdale Bank, N.A.

Credit Union Failures

There were actually more credit union failures in March than bank failures. Since most credit unions that fail are tiny (with under $10 million in assets), I typically wait until there's a bank failure before I review the credit union failures. That's why I'm covering these March credit union failures today.

The two tiny credit unions that failed in March were I.C.E. Federal Credit Union and Pepsi Cola Federal Credit Union; both were in California. One unusual aspect of I.C.E. FCU's failure was that it took five days after its liquidation before the NCUA announced a purchase and assumption agreement. On March 20th, the NCUA announced that Kinecta Federal Credit Union purchased and assumed former I.C.E. Federal Credit Union’s assets, shares and membership.

Pepsi Cola FCU members didn't have that same luck. There was no buyer, so the NCUA had to mail checks of insured deposits to the members. One interesting thing to note is that The Coca-Cola Company Family Credit Union is still operating, and unlike the former Pepsi Cola FCU which had less than one million in assets, The Coca-Cola Company Family Credit Union is not a tiny credit union with $157 million in assets. For credit unions, Pepsi lost to Coke.

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

5th Bank Failure of 2013 (1st in Arizona)

  • Closed Bank: Gold Canyon Bank, Gold Canyon, AZ
  • FDIC Press Release
  • Size: 2 branches, $45.2 million in assets and $44.2 million in deposits
  • Acquiring Bank: First Scottsdale Bank, N.A., Scottsdale, AZ
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by First Scottsdale Bank, N.A. (FDIC Q&A)
  • Rate Changes: Golden Canyon Bank's rates will be reviewed by First Scottsdale Bank, N.A. and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $11.2 million
  • Enforcement Action: Federal Reserve 1/4/12 Written Agreement, Federal Reserve 8/1/12 PCA
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 223.17% at DepositAccounts.com (see financial rating note)

3rd Credit Union Liquidated in 2013 (March 15)

  • CU liquidated: I.C.E. Federal Credit Union of Inglewood, CA
  • Acquiring CU: Kinecta Federal Credit Union of Manhattan Beach, CA
  • NCUA Press Release
  • Size: $3.4 million in assets, 942 members

4th Credit Union Liquidated in 2013 (March 15)

  • CU liquidated: Pepsi Cola Federal Credit Union of Buena Park, CA
  • Acquiring CU: None
  • NCUA Press Release
  • Size: $652,000 in assets, 558 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 Bankrate.com are based on September 30, 2012 data. Ratings at DepositAccounts.com and at BauerFinancial are based on December 31, 2012 data.

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