There were no bank failures this week, and no federally insured credit unions were liquidated. However, there was one failure on Thursday. A privately insured credit union was closed on Thursday by Illinois state regulators. The private deposit insurer is American Share Insurance (ASI), and it announced the closure on its website:
American Mutual Share Insurance Corporation (ASI) announced today that it has accepted appointment as liquidating agent of Bensenville Community Credit Union, located in Bensenville, Illinois, when the Illinois Division of Financial Institutions ordered it closed on July 31, 2014 due to inadequate capital.
Credit Union 1 of Rantoul, Illinois, purchased all of Bensenville Community Credit Union’s loans and other assets and assumed all of its share account liabilities, enabling Bensenville Community Credit Union’s members to continue to receive uninterrupted credit union services.
ASI was able to arrange for Credit Union 1 to assume all deposits from Bensenville. Thus, no depositor should have lost any money. Bensenville Community Credit Union was small with only $14.0 million in assets and 2,200 members as of June 30, 2014.
It has been awhile since an ASI credit union has failed. Based on my records, the last one failed in May 2012, and that was also in Illinois with Credit Union 1 assuming all deposits.
Occasionally I report on good deposit deals at ASI credit unions, and this brings up the concern about depositing money into an institution without federal deposit insurance. With federal deposit insurance (either from the FDIC or NCUA), the insurance fund " is backed by the full faith and credit of the United States Government." With ASI deposit insurance, the insurance fund depends on the health of the private company ASI. If ASI goes out of business, you could lose your deposits if an ASI credit union is liquidated. However, that has not happened since 1974, the year ASI was formed.
There have been some concerns that ASI could have trouble if one or more of its big credit unions were liquidated. One of those troubled large credit unions is Silver State Schools Credit Union. This is a large Nevada credit union that has been having financial problems for the last several years. ASI has provided assistance to this credit union, and the credit union now appears to be healthier.
I have more details on ASI deposit insurance in this blog post.
Below is a summary of the credit union liquidation:
7th Credit Union Liquidation of 2014 - ASI-Insured (July 31)
- Liquidated CU: Bensenville Community Credit Union, Bensenville, Illinois
- Size: 2,200 members and had assets of approximately $14.0 million
- Acquiring CU: Credit Union 1, Rantoul, Illinois
- 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