August was a very quiet month for bank failures with only one bank that failed on August 3rd. September is starting like August with one bank failure on the first Friday of the month. First Commercial Bank in Minnesota was closed by state regulators, and the FDIC arranged for Republic Bank & Trust Company of Kentucky to assume all of the deposits.
That brings the number of bank failures for the year to 41. This is the fourth bank to fail in Minnesota in 2012. At this time last year there had been 71 bank failures, and at this time in 2010 there had been 119 bank failures.
Republic Bank & Trust Company assumed all of the deposits of First Commercial 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 Republic Bank & Trust Company.
I was not able to find any information at the Republic Bank's website regarding what will happen to the rates of existing CDs at First Commercial Bank. The FDIC has its typical information in its Q&A page:
Interest on deposits accrued through close of business on Friday, September 7, 2012 will be paid at your same rate. First Commercial Bank's 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.
Unfortunately, Republic 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.
Credit Union Liquidation
There wasn't a credit union closure this Friday, but there was one on August 9th. Since I didn't do a blog post for that closure, I'll include it today. United Catholic Credit Union was closed by Michigan regulators on August 9th. The NCUA didn't find a buyer so it was liquidated, and members were sent checks for their insured deposits. It was a tiny credit union with only one part-time employee and only $303,000 in deposits. One interesting thing about this failure is that the Michigan regulators alleged that there was criminal activity.
Below is the summary of the recent bank and credit union failures:
41st Bank Failure of 2012 (4th in Minnesota)
- Closed Bank: First Commercial Bank, Bloomington, MN
- FDIC Press Release
- Size: 1 branch, $215.9 million in assets and $206.8 million in deposits
- Acquiring Bank: Republic Bank & Trust Company, Louisville, KY
- Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by Republic Bank & Trust Company (FDIC Q&A)
- Rate Changes: First Commercial Bank's rates will be reviewed by the new bank and may be lowered (FDIC Q&A)
- Estimated Cost to Deposit Insurance Fund: $63.9 million
- Enforcement Action: FDIC 8/4/09 C&D Order
- Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 464.04% at DepositAccounts.com (see financial rating note)
9th Credit Union Liquidation of 2012 (Aug 9th)
- Liquidated CU: United Catholic Credit Union (UCCU), Temperance, MI
- NCUA Press Release
- Size: 200+ members and had $303,000 in deposits
- Acquiring CU: None
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.