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One Small Georgia Bank Closed by Regulators


One Small Georgia Bank Closed by Regulators

A small Georgia bank was closed by state regulators last Friday. Eastside Commercial Bank was the 13th bank in the nation to fail this year, and the first one to fail in Georgia. At this time last year there had been 16 bank failures, and for all of 2013 there had been 24 bank failures.

Friday’s bank closure was typical in that 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 Community & Southern Bank.

CD customers of the failed 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 July 18, 2014 will be paid at your same rate. Eastside Commercial Bank’s rates will be reviewed by Community & Southern 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 Community & Southern Bank.

In previous years, Georgia used to be a leader in the nation for the most bank failures. Many Georgia banks were hit hard by the bursting of the real estate bubble. It appears Eastside was one of them. According to the Atlanta Journal-Constitution:

Founded in 2005, Eastside Commerical Bank was one of the wave of dozens of new banks that were launched in Georgia during the real estate boom, only to struggle for survival after the boom collapsed and real estate developers and other businesses were unable to re-pay loans.

In addition to this bank failure, a credit union failed on July 10th. IBEW Local 816 Federal Credit Union in Paducah, Kentucky was liquidated by the NCUA. The NCUA wasn’t able to find a buyer, so members will receive checks from the NCUA for their insured deposits. Deposits over the coverage limits may be lost. This was a small credit union with only 929 members and about $6.3 million in assets.

Below is the summary of the recent bank and credit union failures:

13th Bank Failure of 2014 (1st in Georgia) (July 18)

  • Closed Bank: Eastside Commercial Bank, Conyers, GA
  • FDIC Press Release
  • Size: 2 branches, $169.0 million in assets and $161.6 million in deposits
  • Acquiring Bank: Community & Southern Bank, Atlanta, GA
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by Community & Southern Bank (FDIC Q&A)
  • Rate Changes: rates will be reviewed by Community & Southern Bank and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $33.9 million
  • Financial Ratings: 1 star at Bankrate.com, 0 stars at BauerFinancial, F & Texas Ratio of 628% at DepositAccounts.com (see financial rating note)

6th Credit Union Liquidation of 2014 (July 10)

  • Liquidated CU: IBEW Local 816 Federal Credit Union of Paducah, Kentucky
  • NCUA Press Release
  • Size: 929 members and had assets of approximately $6.3 million
  • Acquiring CU: None

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 at DepositAccounts.com, Bankrate.com and BauerFinancial are based on March 31, 2014 data.


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Anonymous   |     |   Comment #1
Thank you for including the "Estimated Cost to Deposit Insurance Fund" again.