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One Bank and One Credit Union Fail This Week


The FDIC is easing back into bank closures this week after taking Good Friday off last week. Only one bank failed today. It's the 42nd bank failure of 2010 and the first one in South Carolina. It's not only the first bank failure in South Carolina for 2010, but also the first for the last decade. As I described last Friday, South Carolina was one of only 14 states which had been free of bank failures since the financial crisis began.

According to this AP article, the closed bank, Beach First National Bank, had "invested heavily in the real estate boom in the coastal area, dotted with oceanfront condominiums and upscale projects, and was hit when the market fell."

The bank closure was typical with another bank assuming all deposits even those above the FDIC limit. The acquiring bank was Bank of North Carolina, and they have a FAQ with more details than provided by the FDIC. Here's what the FAQ states regarding rates on existing CDs:

You will continue to receive your interest payments as you have in the past. Your rates on your Certificates of Deposit may change to the current competitive rates for BNC Bank. As a deposit customer you will receive a letter from BNC Bank via U.S. Mail within 7 days of the transaction

There was also a credit union failure this week. The tiny Connecticut credit union, South End Mutual Benefit Association, was shut down on Thursday (4/08/2010). It only had $2.4 million in assets and 385 members. The NCUA didn't find another credit union to acquire South End Mutual, so the credit union is being completely shut down. Members will be receiving checks for their insured amounts. With only $2.4 million in assets and probably less in deposits, I think it's safe to say that no member had over $250,000.

Below is a summary of today's bank and credit union failures:

42nd Bank Failure of 2010 (1st in SC)

  • FDIC Press Release, OCC Press Release
  • Closed Bank: Beach First National Bank, Myrtle Beach, SC
  • Size: 7 branches, $585.1 in assets, $516.0 million in deposits
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. brokered deposits have been transferred
  • Acquiring Bank: Bank of North Carolina, Thomasville, NC
  • Rate Changes: Bank of North Carolina will review rates
  • Estimated Cost to Deposit Insurance Fund: $130.3 million
  • Enforcement Action: OCC 11/4/09 Consent Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

5th Credit Union Failure of 2010

  • NCUA Press Release
  • Closed Credit Union: South End Mutual Benefit Association, Inc
  • Size: 385 members, $2.4 million in assets
  • Acquiring Credit Union: None
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

The above Bankrate ratings are based on 9/30/09 data. BauerFinancial Ratings are based on 12/31/09 data.


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