A small Illinois bank was closed by the Office of the Comptroller of the Currency (OCC) on Friday. GreenChoice Bank was the 14th bank in the nation to fail this year, and the fourth one to fail in Illinois. 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. The FDIC arranged for Providence Bank, LLC of South Holland, Illinois to assume all deposits at GreenChoice Bank. In addition, Providence Bank agreed to purchase most of GreenChoice's assets. Consequently, no depositor 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 Providence Bank, LLC.
CD customers of the failed bank will have to wait to see what happens with their rates. According to Providence Bank’s Q&As:
Providence Bank will be reviewing rates and will notify you of any rate changes. You may withdraw funds from any transferred account without an early penalty until you enter into a new deposit agreement with Providence Bank, unless the deposits are pledged as collateral for loans. Entering into a new deposit agreement can be done by either renewing your CD or making a deposit to, or a withdrawal from, your account.
It’s nice that Providence Bank provided its own Q&As, but unfortunately, it didn’t go above and beyond what it is required to do by the FDIC when it assumes deposits of a failed bank. Every now and then, a bank that assumes deposits of a failed bank will let CDs continue to maturity without lowering rates.
Below is the summary of the Friday bank failure:
14th Bank Failure of 2014 (4th in Illinois) (July 25)
- Closed Bank: GreenChoice Bank, fsb, Chicago, IL
- FDIC Press Release
- Size: 3 branches, $72.9 million in assets and $71.0 million in deposits
- Acquiring Bank: Providence Bank, LLC, South Holland, IL
- Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by Providence Bank, LLC (FDIC Q&A)
- Rate Changes: rates will be reviewed by Providence Bank, LLC and may be lowered (FDIC Q&A)
- Estimated Cost to Deposit Insurance Fund: $14.2 million
- Financial Ratings: 1 star at Bankrate.com, 0 stars at BauerFinancial, F & Texas Ratio of 327% at DepositAccounts.com (see financial rating note)
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.
- 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