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42nd Bank Failure of the Year: Truman Bank of Missouri


42nd Bank Failure of the Year: Truman Bank of Missouri

One small Missouri bank failed this Friday. Truman Bank was closed by state regulators, and the FDIC arranged for Simmons First National Bank to assume all of the failed bank's deposits.

That brings the number of bank failures for the year to 42. This is the second bank to fail in Missouri in 2012. At this time last year there had been 71 bank failures, and at this time in 2010 there had been 125 bank failures.

Simmons First National Bank assumed all of the deposits of Truman Bank. The FDIC has the following message at its Q&A page:

No one lost any money on deposit as a result of the closure of this bank. All deposits, regardless of dollar amount, were transferred to Simmons First National Bank.

Simmons First National Bank included an FAQ page. One Q&A specifically covered changes to interest rates:

Q: Will I continue to earn interest at the same rate? Will I be charged an early withdrawal penalty?

A: Interest on all deposits accrued through September 14, 2012, will be paid at your same rate. Simmons First will review rates and may make changes. As a deposit customer, you will receive a letter from Simmons First via U.S. Mail within 7 days of the transaction with an enclosure titled “Notice of Changes on Interest Bearing Deposits”. Please read the document carefully.

You may withdraw funds from any transferred account without an early withdrawal penalty until you enter into a new deposit agreement with Simmons First. Entering into a new deposit agreement can be done by either renewing your CD or making a deposit to or withdrawal from your account.

The above Q&A is inline with the typical FDIC Q&A. In short, the acquiring bank is allowed to reset the CD rates starting the day after the closure even though it doesn't have to communicate the new CD rates until later.

There were no credit union liquidations this week. The number of credit union liquidations for the year remains at 9. The last closure took place on August 9th.

Below is the summary of today's bank failure:

42nd Bank Failure of 2012 (2nd in Missouri)

  • Closed Bank: Truman Bank, Saint Louis, MO
  • FDIC Press Release
  • Size: 4 branches, $282.3 million in assets and $245.7 million in deposits
  • Acquiring Bank: Simmons First National Bank, Pine Bluff, AR
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. deposits, has been assumed by Simmons First National Bank (FDIC Q&A)
  • Rate Changes: Truman Bank's rates will be reviewed by the new bank and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $34.0 million
  • Enforcement Action: Federal Reserve 12/10/08 written agreement, Federal Reserve 4/20/12 PCA
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 367.11% at DepositAccounts.com (see financial rating note)

Financial Ratings Notes: 0 star is lowest at BauerFinancial, 1 star is lowest at DepositAccounts.com & Bankrate.com, Texas Ratios over 100% is considered at risk. Ratings at DepositAccounts.com and BauerFinancial are based on June 30, 2012 data. Ratings at Bankrate.com are based on March 31, 2012 data.


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Anonymous   |     |   Comment #1
I was wondering why a bank closure costs the deposit insurance fund if another bank is assuming all deposits? thanks. 
KenBDG   |     |   Comment #2
There's also the issue of the failed bank's loans, many of which are bad loans. The FDIC will have to pay out some amount of money to get another bank to acquire these loans along with the deposits. The FDIC has a useful video of its loss share agreement process and how it can save the FDIC money.