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One Bank and Two Credit Unions Closed by Regulators

POSTED ON BY

Bank regulators closed one bank today. Banks of Wisconsin (did business as Bank of Kenosha) was the 14th bank failure this year, and it’s the first in Wisconsin. Last year at this time there had been 24 bank failures in the nation.

This article from the Milwaukee Journal Sentinel describes the financial problems that the bank had:

FDIC records show Banks of Wisconsin has not had a profitable year since 2007, and that it already had lost $558,000 through the first quarter of 2013. It lost $2.2 million in 2012. More than 14% of its loans were in arrears as of March 31, about six times the Wisconsin average of 2.33%.

The bank closure was typical with the FDIC arranging for another bank, North Shore Bank, FSB, to assume all deposits for the failed bank. All deposit accounts, excluding some brokered deposits, were assumed by North Shore Bank, FSB. 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 North Shore Bank, FSB.

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.

Credit Union Liquidations

In addition to the one bank failure on Friday, there were failures of two credit unions: NCP Community Development FCU and First Kingdom Community CU. Another credit union, Electrical Workers #527 FCU, failed on May 23rd. All three credit unions were tiny. The largest one was NCP Community Development which had only $1.6 million in assets and 709 members. The two credit unions that failed on Friday were acquired by healthy credit unions. The NCUA didn’t find a buyer for the Electrical Workers #527 FCU.

Below is the summary of Friday's bank and credit union failures:

14th Bank Failure of 2013 (1st in Wisconsin)

  • Closed Bank:Banks of Wisconsin, Kenosha, WI (did business as Bank of Kenosha)
  • FDIC Press Release
  • Size: 2 branches, $134.0 million in assets and $127.6 million in deposits
  • Acquiring Bank: North Shore Bank, FSB, Brookfield, WI
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. deposits, have been assumed by North Shore Bank, FSB (FDIC Q&A)
  • Rate Changes: rates will be reviewed by North Shore Bank, FSB, and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $26.3 million
  • Enforcement Action: FDIC 3/23/12 Consent Order, FDIC 7/26/12 PCA
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 268.92% at DepositAccounts.com (see financial rating note)

7th Credit Union Liquidation of 2013 (May 23)

  • Liquidated CU: Electrical Workers #527 Federal Credit Union, Texas City, Texas
  • NCUA Press Release
  • Size: 527 members and had assets of $622,857
  • Acquiring CU: None

8th Credit Union Liquidation of 2013

9th Credit Union Liquidation of 2013

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 are based on March 31, 2013. Ratings at Bankrate.com and at BauerFinancial are based on December 31, 2012 data.

References:


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Comments
Comment #1 by pearlbrown posted on
pearlbrown
An update on NCP Community Development FCU from The Credit Union Times: 

"According to the credit union’s financial performance reports, employee compensation increased from $9,819 in 2011 to $151,225 in 2012. That total employee compensation figure was roughly three times the credit union’s loan income during that same time period."

Read more

6