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One Bank Failure, One Credit Union Liquidation and Two Credit Union Conservatorships


One Bank Failure, One Credit Union Liquidation and Two Credit Union Conservatorships

This was one of the rare Fridays in which the NCUA was busier than the FDIC. In addition to a bank failure, there were one credit union liquidation and two credit unions that were placed into conservatorship.

It was another Georgia bank that failed which brings the national total for this year to 48 and the Georgia total for the year to 14. Compared to last year at this time, there were 86 bank failures in the nation with 9 in Georgia.

The failed Georgia bank, Mountain Heritage Bank, was another small community bank. It was acquired by the Georgia bank First American Bank and Trust Company. All deposits except some brokered deposits were assumed by First American Bank. No depositors with regular deposits lost any money, even those above the FDIC limit.

The liquidated New Jersey credit union, St. James A.M.E. Federal Credit Union, was tiny with just $1 million in deposits. The NCUA arranged for North Jersey Federal Credit Union to assume all of the liquidated credit union's members.

The other two credit unions did not fail, but were placed into conservatorship by the NCUA. They were also small credit unions, each with less than $10 million in assets.

No deposits are affected when a credit union is placed into conservatorship. However, if the NCUA determines that the credit union can't be saved, it will be liquidated. So members who find their credit union placed into conservatorship should immediately ensure that all of their deposits are below the NCUA deposit coverage limits.

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

48th Bank Failure of 2011 (14th in Georgia)

  • FDIC Press Release
  • Closed Bank: Mountain Heritage Bank, Clayton, GA
  • Size: 2 branches, $103.7 million in assets, $89.6 million in deposits
  • Acquiring Bank: First American Bank and Trust Company, Athens, GA
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by First American Bank and Trust Company
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered (FDIC FAQs)
  • Estimated Cost to Deposit Insurance Fund: $41.1 million
  • Enforcement Action: FDIC 6/17/09 C&D Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 904.09% at DepositAccounts.com (see financial rating note)

10th Credit Union Liquidation of 2011 (June 24th)

7th Credit Union Conservatorship of 2011 (June 24th)

  • NCUA Press Release
  • CU placed into conservatorship: Borinquen Federal Credit Union, Philadelphia, PA
  • Size: $7 million in assets and serves 8,600 members
  • Financial Ratings: 3 stars at Bankrate.com, 3 stars at BauerFinancial, 3 stars & Texas Ratio of 22.36% at DepositAccounts.com (see note)

8th Credit Union Conservatorship of 2011 (June 24th)

  • NCUA Press Release
  • CU placed into conservatorship: O.U.R. Federal Credit Union, Eugene, OR
  • Size: $4.3 million in assets and serves 2,184 members
  • Financial Ratings: 2 stars at Bankrate.com, 1 star at BauerFinancial, 3 stars & Texas Ratio of 7.45% at DepositAccounts.com (see note)

Financial Ratings Notes: 0 star is lowest at BauerFinancial, 1 star is lowest at Bankrate.com & DepositAccounts.com, Texas Ratios over 100% is considered at risk. Ratings are based on March 2011 data except at Bankrate.com which are still based on December 2010 data.


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Anonymous   |     |   Comment #1
The fixed costs to run a bank or a credit union are high and getting higher. There are many tiny credit unions (and small banks) which need to be merged or closed.
eric2   |     |   Comment #2
Or, alternatively, something needs to be done about the excessive regulations that are driving the cost of doing business higher and higher. Small banks and credit unions are a good thing for the economy, and if we're regulating them out of business, we need to look into how we fix that.