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Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Just One Bank Failure Today


Just One Bank Failure Today

The FDIC is starting off slowly in 2011. There was only one closure today which brings the total number of bank failures for 2011 to three. Oglethorpe Bank in Brunswick, Georgia was closed by regulators. The FDIC arranged for Bank of the Ozarks to assume all of the deposits. The only exception is that certain brokered deposits were not assumed. The FDIC stated in its Q&As for this closure that "No one lost any money on deposit as a result of the closure of this bank." This same thing happened for the vast majority of 2010 closures.

The main concern for depositors will be rate cuts on existing CDs. Bank of the Ozarks provided a Q&A section on its website in which it admitted that rates will be "adjusted to current market rates". Here's the excerpt from the Q&A:

Will there be any changes to my CDs or IRAs?

* Rates on certain CD accounts and IRA accounts will be adjusted to current market rates. We will notify you by mail of any changes to interest rates paid on time deposit accounts.

* You can withdraw part or all of your funds from your CD without an early withdrawal penalty until you enter a new agreement with Bank of the Ozarks, provided you are not using your CD to secure a loan.

* If you currently receive interest payments, those payments will continue without interruption.

How many banks will fail in 2011? At the end of my review of 2010 bank failures I considered this question. It appears that we may be past the peak of closures. After the first two weeks of 2010, there were four failures. So with three failures in 2011, we are starting off at little slower pace.

There have been no credit union liquidations this week. There were 19 credit union liquidations in 2010.

Below is a summary of today's bank failure:

3rd Bank Failure of 2011 (1st in Georgia)

  • FDIC Press Release
  • Closed Bank: Oglethorpe Bank, Brunswick, GA
  • Size: 2 branches, $230.6 million in assets, $212.7 million in deposits
  • Acquiring Bank: Bank of the Ozarks, Little Rock, AR
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by Bank of the Ozarks
  • Rate Changes: Rates on certain CD accounts and IRA accounts will be adjusted to current market rates. Customers will be notified of changes by mail (per Bank's Q&A's)
  • Estimated Cost to Deposit Insurance Fund: $80.4 million
  • Enforcement Action: Nothing public
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 0 out of 5 with a Texas Ratio of 566.10% at DepositAccounts.com

The above ratings are based on September 2010 data.


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