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Irwin Union Banks Closed by Regulators, First Financial Bank Assumes All Deposits


The two banking subsidiaries of Irwin Financial Corporation were closed today by regulators. Both of the subsidiaries had separate FDIC charters so this technically counts as two failed banks which brings the total number of failed banks this year to 94. I was waiting for some additional west coast bank failures, but these were the only two failures for today. The last Friday in which only two or fewer banks were closed was on July 10th when only Bank of Wyoming failed.

There were signs that the end was near for Irwin when it was reported on Wednesday of Irwin Financial Corp's admission that it had "no realistic prospect" of boosting its capital to levels demanded by a regulatory cease and desist order.

The FDIC arranged for First Financial Bank to assume all of the deposits of both Irwin Union banks. All deposits were transferred even those above the FDIC limit. So no depositors will lose any money. This has been typical for this year's bank failures. The only worry for depositors has been the assuming bank cutting rates. The FDIC is rarely helpful in describing the rate decisions by the assuming banks. In the FDIC's Q&A, they typically say that the assuming bank will be reviewing rates and will contact the depositors on any rate changes.

Update 9/19/09: When I wrote this post last night, I had noticed a welcome letter at First Financial Bank for Irwin Union Bank customers. Without carefully reading this, I had thought this was in relationship to Friday's bank failure. It was actually just related to last month's sale of three of Irwin Union branches. In the letter First Financial Bank had stated that there will be no changes to CD rates and terms through to maturity. Unfortunately, this doesn't apply to Friday's closure, and Irwin Union Bank customers will have to wait to see what First Financial Bank decides in terms of existing CDs.

Update 9/26/09: First Financial has released a letter to Irwin Union Bank depositors in which they announced how existing Irwin Union CDs will change:
If your certificates of deposit currently has a rate greater than 1.50%, it will be reduced, effective September 24, 2009, to 1.50%/1.51% annual percentage yield until its maturity

I reported on several Irwin Union CD promotions in the last year. One was a 5.05% 25-month CD last October, so hopefully, First Financial will honor those CD rates to maturity. In a June 2009 promotion Irwin Union was offering a $300 gift along with a competitive 11-month CD. I hope everyone who did this promotion received the gift. In past bank failures the assuming banks didn't honor bonuses that had not been paid out by the failed bank.

Depositors of the former Corus Bank (failed last Friday) had first-hand experience of having rates cut after a bank closure. I reported on Monday of MB Financial's plans on closing Corus Bank CDs and re-pricing Corus money market account rates. Readers have reported that their Corus Bank money market rates were being slashed down to 0.05%.

Below is a summary of today's bank failures:

93rd Bank Failure of 2009 (1st in IN)
  • FDIC Press Release
  • Closed Bank: Irwin Union Bank and Trust Company, Columbus, IN
  • Size: 18 offices in IN, UT, MI & NV, $2.7 billion in assets, $2.1 billion in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: First Financial Bank, N.A., Hamilton, OH
  • Rate Changes: First Financial Bank, N.A. will review rates
  • Estimated Cost to Deposit Insurance Fund: $850 million (for both Irwin Union banks)
  • Financial Ratings: 0 star (lowest) at BauerFinancial, 1 star (lowest) at Bankrate.com
94th Bank Failure of 2009 (1st in KY)
  • FDIC Press Release
  • Closed Bank: Irwin Union Bank, F.S.B., Louisville, KY
  • Size: 9 offices in AZ, CA, IN, KY, NV, NM & MO, $493 million in assets, $441 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: First Financial Bank, N.A., Hamilton, OH
  • Rate Changes: First Financial Bank, N.A. will review rates
  • Estimated Cost to Deposit Insurance Fund: $850 million (for both Irwin Union banks)
  • Financial Ratings: 1 star (troubled) at BauerFinancial, 2 stars (below peer group) at Bankrate.com

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Anonymous   |     |   Comment #1
Why is the First Financial letter to Irwin customers dated 8/18/2009?
Anonymous   |     |   Comment #2
The letter looks like its in regards to three branches First Financial bought from Irwin last month, unrelated to their failure today.
Banking Guy
Banking Guy   |     |   Comment #3
Thanks for catching this. You're right. It's in relationship to the branches that were sold last month. Never thought of that possibility when I quickly read the letter. I've updated the post with this correction.
Anonymous   |     |   Comment #4
Well, At least I have my new LG 22" LCD HDTV from their promotion.
Louis   |     |   Comment #5
I called the FDIC at the 800-528-4893 phone number that is specifically set up for Irwin customers and they said I have the right to withdraw money from a CD early penalty free from these transfered accounts. I participated in the 11 Month promo. I suppose I'll pull my money out and find a better rate elsewhere.
Anonymous   |     |   Comment #6
Yeah, I also have my LG HDTV, and am very happy with it. Shame that Irwin couldn't hack it, as their CSR was the most polite, most helpful I can remember dealing with in years.

But, it looked like the writing was on the wall in large letters.

I am in all likelihood going to redeem my 11 mo CD early, as there is a local rate for 12 months that is .50 % APR higher.

C'est la vie, Irwin....
Louis   |     |   Comment #7
My 11 month promo CD was opened for a month, got the tv. Called them today. They are closing my account penalty free and I'm getting principal and interest sent back to my funding account. That was a 21.7% annual interest rate paid to me for the month. Fantastic.
Anonymous   |     |   Comment #8
Louis, if you are seeing this....what number/whom did you call. I am having a bit of difficulty trying to do this over the phone. I called First Financial, and they said they don't do online CD's, and referred me to a web address that they said was now handling Irwin's online CD situation.

But when I typed it in (it was www.element-direct.com), it immediately defaulted back to First Financial's website. I then called a number that Irwin's CSR gave me in an e-mail reply after the takeover, and it turned out to be just another number for First Financial.

I'll start the process over again tomorrow, but if you (or anybody) has a number or contact that went smoothly, it would be appreciated.

Louis   |     |   Comment #9
I called First Financial and they transfered me to Irwin. After talking to an Irwin customer service rep, she transfered me to the Irwin rep who handles the closing of accounts. So I don't have and didn't use an Irwin phone number.
Anonymous   |     |   Comment #10

Thanks for the reply.....it took a bit of doing, but I think they're on it finally.

Anonymous   |     |   Comment #11
As of September 24, First Financial lowered the rate on all Irwin CD 's to 1.50%. There is a letter about this at:

Jacqueline   |     |   Comment #12
I just called First Financial regarding my Irwin online CD account and was referred to Elements Financial. I spoke with the rep and she assured me the rate hasn't changed and it is still 2.01%. I acquired about the letter that First Financial lowered the rate on all Irwin CD 's to 1.50%, and the rep said it didn't apply to my case (?). However, I don't feel comfortable about it and asked to withdraw my funds and close the account. The process was easy, the rep verified my personal info, my bank account info to transfer the funds back to, and my email. Hopefully everything will go smoothly.
Anonymous   |     |   Comment #13

I think you probably did the right thing.

Aside from the fact that you should be able to find a better rate, when I spoke to the different reps, I got the feeling that the left hand wasn't exactly sure what the right hand was doing. You've got conflicting info on your rate, with the more official info claiming the rate was lowered.

I pulled my funds out, and I had the same experience - it went smoothly and quickly.....the pulled funds showed at Irwin's site last Friday, and showed in my transferred account the following Monday AM, and have already been reinvested.
Jacqueline   |     |   Comment #14
To the poster above, yeah, I think I did the right thing too. Everything went well and smoothly, and the funds showed up in my bank account in 2 days. Now time to shop for a good CD rate.....if there's even any out there these days...