Dedicated to Deposits: Deals, Data, and Discussion

One Oklahoma Bank and One Illinois Credit Union Closed by Regulators

POSTED ON BY

The second bank failure of 2014 occurred on Friday. The Bank of Union in El Reno, Oklahoma was closed by state regulators, and the FDIC arranged for a purchase and assumption agreement with BancFirst of Oklahoma City. Only 24 banks failed last year, so I’m not expecting more than 2 bank failures per month in 2014.

The closure of Bank of Union was typical. The FDIC was able to find a buyer. BancFirst of Oklahoma City agreed to assume all of the deposits. Consequently, no one lost any money. According to the FDIC FAQs:

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 BancFirst.

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

The first credit union liquidation of 2014 took place on Tuesday. Bagumbayan Credit Union of Chicago was closed by regulators and the NCUA arranged for Great Lakes Credit Union to assume all deposits. Bagumbayan was a tiny credit union with only 44 members and $55,140 in assets. I think it’s safe to say that no one had over $250K in deposits.

In addition the liquidation, a credit union was placed into a NCUA conservatorship. The conserved credit union was Parsons Pittsburg Credit Union in Kansas. Unlike the FDIC, the NCUA often places institutions in a conservatorship in which the NCUA takes over management of the credit union in an attempt to resolve issues affecting the credit union’s safety and soundness. During this time, members have full access to all of their deposits including deposits over the NCUA limits. However, members with uninsured deposits should quickly take care of those deposits. It’s common for credit unions placed into conservatorships to be liquidated when the NCUA determines that the credit union’s problems cannot be resolved.

Below is the summary of Friday’s bank failure, Tuesday’s credit union liquidation and Friday’s credit union conservatorship:

2nd Bank Failure of 2014 (1st in Oklahoma)

  • Closed Bank:The Bank of Union, El Reno, OK
  • FDIC Press Release
  • Size: 2 branches, $331.4 million in assets and $328.8 million in deposits
  • Acquiring Bank: BancFirst, Oklahoma City, OK
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. deposits, have been assumed by BancFirst (FDIC Q&A)
  • Rate Changes: rates will be reviewed by BancFirst and may be lowered (FDIC Q&A)
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, F & Texas Ratio of 329.56% at DepositAccounts.com (see financial rating note)

1st Credit Union Liquidation of 2014 (Jan 21)

  • Liquidated CU: Bagumbayan Credit Union, Chicago, IL
  • NCUA Press Release
  • Size: 44 members and had assets of $55,140
  • Acquiring CU: Great Lakes Credit Union of North Chicago, IL

1st Credit Union Conservatorship of 2014 (Jan 24)

  • CU placed into conservatorship: Parsons Pittsburg Credit Union, Parsons, KS
  • NCUA Press Release
  • Size: 1,470 members and assets of $13.5 million

Financial Ratings Notes: 0 star is lowest at BauerFinancial, 1 star is lowest at Bankrate.com and an F is lowest at DepositAccounts.com &, Texas Ratios over 100% is considered at risk. Ratings are based on September 30, 2013 data.

References:


Related Posts

Comments