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Two Banks in Virginia and Pennsylvania Closed by Regulators

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Two Banks in Virginia and Pennsylvania Closed by Regulators

For the first time in 2014, two banks failed on the same Friday. The first one was Millennium Bank, N.A. in Sterling, VA. It was closed by the OCC, and the FDIC arranged for WashingtonFirst Bank of Reston, Virginia to assume all of the deposits. The second one was Vantage Point Bank of Horsham, Pennsylvania. It was closed by state regulators, and the FDIC arranged for First Choice Bank, Mercerville, New Jersey, to assume all of the deposits.

So far in 2014, five banks have failed. Only 24 banks failed last year. So the pace of closures this year just exceeds last year's pace.

These two bank closures were typical. The FDIC was able to find a buyer for each bank. 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 [the acquiring bank].

CD customers of the two 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.

The second credit union liquidation of 2014 took place on February 14th. St. Francis Campus Credit Union of Little Falls, MN was closed by state regulators, and the NCUA arranged for Central Minnesota Credit Union of Melrose, MN to assume all of St. Francis Campus Credit Union members, assets, shares and loans.

Below is the summary of Friday’s bank failures and last week’s credit union liquidation:

4th Bank Failure of 2014 (1st in Virginia)

  • Closed Bank: Millennium Bank, N.A., Sterling, VA
  • FDIC Press Release
  • Size: 2 branches, $130.3 million in assets and $121.7 million in deposits
  • Acquiring Bank: WashingtonFirst Bank, Reston, VA
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by WashingtonFirst Bank (FDIC Q&A)
  • Rate Changes: rates will be reviewed by the WashingtonFirst Bank and may be lowered (FDIC Q&A)
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, F at DepositAccounts.com (see financial rating note)

5th Bank Failure of 2014 (1st in Pennsylvania)

  • Closed Bank: Vantage Point Bank, Horsham, PA
  • FDIC Press Release
  • Size: 1 branch, $63.5 million in assets and $62.5 million in deposits
  • Acquiring Bank: First Choice Bank, Mercerville, NJ
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by First Choice Bank (FDIC Q&A)
  • Rate Changes: rates will be reviewed by First Choice Bank and may be lowered (FDIC Q&A)
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, F at DepositAccounts.com (see financial rating note)

2nd Credit Union Liquidation of 2014 (February 14)

  • Liquidated CU: St. Francis Campus Credit Union of Little Falls, MN
  • NCUA Press Release
  • Size: 3,400 members and assets of approximately $51 million
  • Acquiring CU: Central Minnesota Credit Union of Melrose, MN

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:



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Comments
5 Comments.
Comment #1 by Anonymous posted on
Anonymous
I see FDIC has relaxed the formula for closing institutions. It used to be (few years ago) 80% liability to assets ratio, now is close to 100%. It means, there are much more banks in trouble than we are lead to believe.

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Comment #2 by Anonymous posted on
Anonymous
The FDIC/OCC should start doing some serious house cleaning.  Put together a plan to shutdown all the Banks on the problem list on a time schedule.  Then start agressively shutting down all the problem ones "asap".  They're not getting better, their just a drain on the system, with the open access to the "borrowing window" at 0% rate.

4
Comment #3 by Anonymous posted on
Anonymous
Small problem: All the banks on the problem list aren't insolvent.

2
Comment #4 by Anonymous posted on
Anonymous
It's not hard to resolve that "small problem".

Just make the list of problem banks public!  Then how long do you think they will be solvent?

4
Comment #5 by Anonymous posted on
Anonymous
The relative size of these institutions is miniscule. The FDIC is doing their job! 

6