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Three Banks Closed By Regulators in Florida and Kentucky

POSTED ON BY

This was the first Friday this year in which multiple banks failed. Three banks were closed by regulators. We were due for a busy Friday. Before this Friday there had been only five bank failures this year. Now it's up to eight. At this time last year there had already been 17 bank failures, and at this time in 2011, there had been 34 bank failures. So even after these three closures, the pace of bank failures continues to be low compared to the last two years.

The first bank that failed this Friday was First Federal Bank of Lexington, Kentucky. That was the first bank failure of the year for Kentucky. The other two failed banks were in Florida, Heritage Bank of North Florida in Orange Park and Chipola Community Bank in Marianna. These were the first banks to fail in Florida this year.

As has been common this year, all of the failed banks were small community banks. The largest was Heritage Bank of North Florida which had just under $111 million in assets.

All three bank closures were typical with the FDIC arranging for another bank to assume all deposits for each failed bank. One thing that was a bit unusual is that all brokered deposits of the three failed banks were also assumed. For all three failed banks, 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 [the new bank].

CD customers of the failed bank will have to wait to see what happens with their rates. The acquiring banks may reduce rates on the existing CDs. However, customers will be allowed to make a penalty-free early withdrawal.

In addition to the bank failures, one tiny credit union failed on April 12th. It was Shiloh of Alexandria Federal Credit Union of Alexandria, VA. The NCUA did not arrange for another credit union to assume deposits. According to the NCUA's press release:

NCUA’s Asset Management and Assistance Center will issue correspondence to individuals holding verified share accounts in the credit union within one week.

So there may be some members who will lose deposits that exceeded the NCUA coverage limits. However, it only had $2 million in total deposits with 624 members. So it's doubtful that any member had over $250,000 in deposits.

One interesting thing to note about this credit union is that I mentioned it in my 2011 post High CD Rates from a Tiny Credit Union - Concerns?. At that time, the credit union was listing a 5.05% 1-year CD. The highest 1-year CD yield that was nationally available at that time was 1.75%.

Below is the summary of the today's bank failures and last week's credit union liquidation:

6th Bank Failure of 2013 (1st in Kentucky)

  • Closed Bank: First Federal Bank, Lexington, KY
  • FDIC Press Release
  • Size: 5 branches, $100.1 million in assets and $93.9 million in deposits
  • Acquiring Bank: Your Community Bank, New Albany, IN
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, has been assumed by Your Community Bank (FDIC Q&A)
  • Rate Changes: First Federal Bank’s rates will be reviewed by Your Community Bank and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $9.7 million
  • Enforcement Action: OCC 10/18/12 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 355.44% at DepositAccounts.com (see financial rating note)

7th Bank Failure of 2013 (1st in Florida)

  • Closed Bank: Heritage Bank of North Florida, Orange Park, FL
  • FDIC Press Release
  • Size: 2 branches, $110.9 million in assets and $108.5 million in deposits
  • Acquiring Bank: FirstAtlantic Bank, Jacksonville, FL
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by FirstAtlantic Bank (FDIC Q&A)
  • Rate Changes: Please know that while a majority of CD rates will not change, some may. If your CD rates are affected, you will receive a Notice of Certificate of Deposit Rate Change in the mail within a few business days (Bank's FAQ)
  • Estimated Cost to Deposit Insurance Fund: $30.2 million
  • Enforcement Action: FDIC 8/4/09 C&D Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 434.63% at DepositAccounts.com (see financial rating note)

8th Bank Failure of 2013 (2nd in Florida)

  • Closed Bank: Chipola Community Bank, Marianna, FL
  • FDIC Press Release
  • Size: 1 branch, $39.2 million in assets and $37.6 million in deposits
  • Acquiring Bank: First Federal Bank of Florida, Lake City, FL
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by First Federal Bank of Florida (FDIC Q&A)
  • Rate Changes: First Federal Bank of Florida will review rates and notify you if interest rates will change. Your interest rate may be reduced. (Bank's FAQ)
  • Estimated Cost to Deposit Insurance Fund: $10.3 million
  • Enforcement Action: FDIC 11/15/10 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 280.93% at DepositAccounts.com (see financial rating note)

5th Credit Union Liquidated of 2013 (April 12)

  • CU liquidated: Shiloh of Alexandria Federal Credit Union of Alexandria, VA
  • Acquiring CU: None
  • NCUA Press Release
  • Size: $2.4 million in assets, 624 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, at Bankrate.com and at BauerFinancial are based on December 31, 2012 data.

References:


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Comments
6 comments.
Comment #1 by Anonymous posted on
Anonymous
Lots of banks need closed.  But it can cost money to close banks.  Obama leaves most open so he can spend the money on his social programs.  After all, he has control now of the interest rates paid by poorly performing banks;  this protects his big bank buddies.  So there is no hurry for him to close failing banks..

4
Comment #2 by paoli2 posted on
paoli2
Well there goes some of my best interest rates!  That bank has been in trouble for quite a while and they seemed to have problems getting a buyer.  We got a letter in the mail stating another bank was acquiring it and keeping same interest rates then they backed out.  Our First Federal is in another part of Ky but I think they all are in trouble.  Nice while it lasted!

3
Comment #3 by paoli2 posted on
paoli2
Whew!  What a difference a name makes!  I just got off of the phone with Your Community Bank and First Federal Savings and was told that the one we bank with was not closed!  We dodged the bullet for "this" time it seems.  My CDs mature next year with them and I sure hated to lose the good interest rates which I can't get again.   The bank in Lexington is called First Federal Bank but ours is First Federal "Savings" and it is still up and running thank goodness.

2
Comment #4 by Anonymous posted on
Anonymous
Most of the small banks are in trouble due to low interest rates. They can not make money under these conditions.

FDIC will either close them or integrate them into bigger regional banks. There is no other alternative thanks to Bernanke's low interest rates mentaity.

8
Comment #6 by paoli2 posted on
paoli2
#4 If loans in default are the problem why are they on the back of savers?  Also, why are they making more of these loans everyday?  The Fed ****ed up and we savers are being penalized.  There has got to be a way to overcome this drastic problem!  I have CDs maturing soon and I may as well bury them in my backyard ("if" I still had one!)

8
Comment #7 by Anonymous posted on
Anonymous
#6 - You might be able to "overcome" it by dusting off your old copy of The Petition again and give it another try. Good luck.

3
Comment #8 by paoli2 posted on
paoli2
#6   I would rather walk through hot coals!  That wasn't MY Petition and I am not going to open that door again.  No one is stopping YOU from doing one tho.  I'll be glad to sign it if it is one I agree with.

3
Comment #9 by Anonymous posted on
Anonymous
#8 - LOL on the 'hot coals'. After what you had to endure, as a result of your previous efforts with The Petition, I guess I might feel the same way in wanting to stay clear of another round with it. Peace. 

2
Comment #5 by Anonymous posted on
Anonymous
Low interest rates are not the problem.  Loans in default are the problem.

7
Comment #10 by Bancxman (anonymous) posted on
Bancxman
"Lots of banks need closed.  But it can cost money to close banks.  Obama leaves most open so he can spend the money on his social programs."

Anonymous # 1: The FDIC Deposit Insurance Fund is funded by premiums assessed against FDIC insured banks. None of the funds used to make the depositors of the aforementioned three failed banks whole came from the U.S. Treasury. So, rather than using this blog as a forum to launch a misguided attack against the Administration, consider doing some research about the FDIC and how it handles bank failures.

 

4
Comment #12 by paoli2 posted on
paoli2
#10  This has to be said.  If the remainer of us love our freedom then "WHO" voted for Obama and gave him his second term??   Sorry but all those votes did not just come from the Northeast.  But nothing lasts forever and one day his term will be finished and maybe we can get one of those other great politicians who are in with him now to make things all better for us.  Right!   What a joke!

4