Two small financial institutions were closed by regulators on Friday. The first was Columbia Savings Bank in Cincinnati, Ohio. It was the eighth bank to fail in the nation this year. State regulators closed the bank, and the FDIC arranged for United Fidelity Bank in Indiana to assume all deposits. The second failed institution was Life Line Credit Union, Inc., of Richmond, Virginia. It was the fifth credit union to fail in the nation this year. State regulators closed the credit union, and the NCUA arranged for Virginia Credit Union to assume all member shares (deposits).
The pace of bank failures is starting to pick up. After no bank failures for all of March and most of April, there has now been 3 bank failures over the last month. Nevertheless, the total number of bank failures for the year is 8, and that is low this far into the year. At this time last year there had been 13 bank failures, and for all of 2013 there had been 24 bank failures. If the current pace continues for 2014, there will be only around 20 bank failures for the year. The frequency of bank failures has declined since 2010 when 157 banks failed. In good economic times, bank failures have been rare. For example, no banks failed in 2005 and 2006, and only 3 banks failed in 2007.
This bank closure was typical. The FDIC was able to find a buyer. Consequently, no one lost any money. According to the FDIC FAQs:
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 United Fidelity Bank, fsb.
CD customers of Columbia Savings Bank will have to wait to see what happens with their rates. According to the FDIC FAQs:
Interest on deposits accrued through close of business on May 23, 2014 will be paid at your same rate. Columbia Savings Bank’s rates will be reviewed by United Fidelity Bank, fsb, 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 United Fidelity Bank, fsb.
Below is the summary of the May 23rd bank and credit union failures:
8th Bank Failure of 2014 (1st in Ohio)
- Closed Bank: Columbia Savings Bank, Cincinnati, OH
- FDIC Press Release
- Size: 1 branch, $36.5 million in assets and $29.5 million in deposits
- Acquiring Bank: United Fidelity Bank, fsb
- Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by United Fidelity Bank, fsb (FDIC Q&A)
- Rate Changes: Columbia Savings Bank’s rates will be reviewed by United Fidelity Bank, fsb, and may be lowered (FDIC Q&A)
- Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, F & Texas Ratio of 328% at DepositAccounts.com (see financial rating note)
5th Credit Union Liquidation of 2014
- Liquidated CU: Life Line Credit Union, Inc., Richmond, VA
- NCUA Press Release
- Size: 2,076 members and had assets of $7.9 million
- Acquiring CU: Virginia Credit Union, Inc., North Chesterfield, VA
Financial Ratings Notes: 0 star is lowest at BauerFinancial, 1 star is lowest at Bankrate.com and an F is lowest at DepositAccounts.com &, Texas Ratios over 100% is considered at risk. Ratings are based on December 31, 2013 data.
- FDIC list of failed banks
- Texas Ratios for banks and credit unions
- Latest FDIC info on deposit insurance
- My bank failure review posts
- Review of the 2013 bank and credit union failures
- Review of the 2012 bank and credit union failures
- Review of the 2011 bank and credit union failures
- Review of the 2010 bank and credit union failures
- 10 Lessons from the 2008 bank failures