We didn't see many bank failures in the first quarter of this year. That changed in April with six failures, and it's continuing into May. Two more banks failed this Friday. That raises the bank failure count to 12 for the nation this year. At this time last year there had already been 23 bank failures, and at this time in 2011, there had been 40 bank failures.
The first bank that failed this Friday was Pisgah Community Bank, Asheville, North Carolina. That was the second bank failure of the year for North Carolina. The other failed bank, Sunrise Bank, was the third bank failure of the year for Georgia.
As has been common this year, both of the failed banks were community banks. The largest was Sunrise Bank with just $60.8 million in assets.
Both bank closures were typical with the FDIC arranging for another bank to assume all deposits for each failed bank. All brokered deposits of the two failed banks were also assumed. For both of the 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 banks 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 Liquidation
On May 3rd, the NCUA liquidated Lynrocten Federal Credit Union of Lynchburg, Virginia. That's the sixth credit union liquidation of the year. As I described in my Monday review, the liquidation may have been due to criminal activity. There's a little more information on the liquidation in this Lynchburg newspaper. One interesting bit of news is how the NCUA is paying depositors:
Lynrocten members with more than $1,500 deposited will need to fill out and submit a member confirmation and affidavit form before their balance is processed and returned to them, Fairbanks said.
Those with less than $1,500 in savings at the credit union should receive a check this week
So it looks like it may take multiple weeks for some members to receive their insured deposits.
Below is the summary of the bank and credit union failures:
11th Bank Failure of 2013 (2nd in North Carolina)
- Closed Bank: Pisgah Community Bank, Asheville, NC
- FDIC Press Release
- Size: 1 branch, $21.9 million in assets and $21.2 million in deposits
- Acquiring Bank: Capital Bank, National Association, Rockville, MD
- Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by Capital Bank, N.A. (FDIC Q&A)
- Rate Changes: Pisgah Community Bank’s rates will be reviewed by Capital Bank, N.A., and may be lowered (FDIC Q&A)
- Estimated Cost to Deposit Insurance Fund: $8.9 million
- Enforcement Action: FDIC 5/5/10 Consent Order, FDIC 1/20/12 PCA
- Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 260.44% at DepositAccounts.com (see financial rating note)
12th Bank Failure of 2013 (3rd in Georgia)
- Closed Bank: Sunrise Bank, Valdosta, GA
- FDIC Press Release
- Size: 3 branches, $60.8 million in assets and $57.8 million in deposits
- Acquiring Bank: Synovus Bank, Columbus, GA
- Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by Synovus Bank (FDIC Q&A)
- Rate Changes: Sunrise Bank’s rates will be reviewed by Synovus Bank and may be lowered (FDIC Q&A)
- Estimated Cost to Deposit Insurance Fund: $17.3 million
- Enforcement Action: FDIC 1/8/10 Consent Order, FDIC 1/23/12 PCA
- Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 369.03% at DepositAccounts.com (see financial rating note)
6th Credit Union Liquidated of 2013 (May 3)
- CU liquidated: Lynrocten Federal Credit Union of Lynchburg, VA
- Acquiring CU: None
- NCUA Press Release, My review
- Size: $13.8 million in assets, 1,068 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.
- 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