Two banks failed this Friday which brings the total number of failures for the year to nine. Last year at this time there had been 18 bank failures. This shows how the pace of closures has slowed.
Charter National Bank and Trust in Illinois was the first failure. The FDIC arranged for Barrington Bank & Trust Company, N.A. to assume all deposits. SCB Bank in Indiana was the second failure. All deposits were assumed by First Merchants Bank, N.A.
Both of the acquiring banks have not posted their plans for CDs from the failed banks. The FDIC has the same paragraph for both banks in the Q&As regarding the CD rates:
Interest on deposits accrued through close of business on February 10, 2012 will be paid at your same rate. [The failed banks'] rates will be reviewed by the new bank and may be lowered; however, you will be notified in writing of any changes. You may withdraw funds from any transferred account, regardless of whether your interest rate changes, without early withdrawal penalty until you enter into a new deposit agreement with the new bank.
On February 1st we saw what an acquiring bank can do to CD rates. When Tennessee Commerce Bank (TCB) failed on January 27, Republic Bank assumed its deposits. On Tuesday January 31st Republic Bank decided to cut all TCB CD rates to 0.05% effective Saturday January 28. This shows why it's a good idea for CD holders to be proactive when their banks fail. You may lose weeks of interest if you wait for your bank to notify you.
Credit Union Liquidations
I had missed the first credit union liquidation of the year. It was Eastern New York Federal Credit Union in New York which was liquidated by the NCUA on January 27. The NCUA was able to find another credit union to assume all of the members, assets, loans and debts.
Below is the summary of Friday's bank failures and the recent credit union liquidation.
8th Bank Failure of 2012 (1st in Illinois)
- Closed Bank: Charter National Bank and Trust, Hoffman Estates, IL
- FDIC Press Release
- Size: 2 branches, $93.9 million in assets and $89.5 million in deposits
- Acquiring Bank: Barrington Bank & Trust Company, N.A., Barrington, IL
- Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by Barrington Bank & Trust Company, N.A.
- Rate Changes: Charter National Bank and Trust’s rates will be reviewed by the new bank and may be lowered (FDIC's Q&A)
- Estimated Cost to Deposit Insurance Fund: $17.4 million
- Enforcement Action: OCC 4/29/10 Consent Order, OCC 12/20/11 PCA
- Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 265.66% at DepositAccounts.com (see financial rating note)
- Closed Bank: SCB Bank, Shelbyville, IN
- FDIC Press Release
- Size: 4 branches, $182.6 million in assets and $171.6 million in deposits
- Acquiring Bank: First Merchants Bank, N.A., Muncie, IN
- Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. deposits, has been assumed by First Merchants Bank, N.A.
- Rate Changes: SCB Bank’s rates will be reviewed by the new bank and may be lowered (FDIC Q&A)
- Estimated Cost to Deposit Insurance Fund: $33.9 million
- Enforcement Action: OTS 5/16/11 C&D Order
- Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 198.26% at DepositAccounts.com (see financial rating note)
1st Credit Union Liquidation of 2012 (Jan 27)
- Liquidated CU: Eastern New York Federal Credit Union of Napanoch, NY
- NCUA Press Release
- Size: $49 million in deposits and 6,800 members
- Acquiring CU: USAlliance Federal Credit Union, Rye, NY
- Financial Ratings: 1 star at Bankrate.com, ? star at BauerFinancial, 2 stars & Texas Ratio of 32.31% at DepositAccounts.com (see financial rating 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 September 2011 data.