Activity has picked up at the FDIC. The second bank failure of October occurred last night. That’s two Fridays in a row with a bank failure. Before last week’s bank closure, we had almost three months free of bank failures.
This week’s closure was in Illinois. The OCC closed The National Republic Bank of Chicago, and the FDIC entered into a purchase and assumption agreement with another bank. It was the 16th bank in the nation to fail this year, and the fifth one to fail in Illinois. At this time last year there had been 22 bank failures, and for all of 2013 there had been 24 bank failures.
One interesting thing to note about The National Republic Bank of Chicago is that the bank had been offering top CD rates in 2013. I reported on the bank’s long-term CD rates last year. The bank allowed people in any state to open CDs via an online application. In March 2013 the bank had a Texas ratio of 37.36% (below average). The Texas ratio went way up in the last 18 months. At the time of the failure, the bank’s Texas ratio was 318%. Texas ratios over 100% are considered at risk.
The closure of The National Republic Bank of Chicago was typical in that the FDIC was able to find a buyer. The FDIC arranged for State Bank of Texas of Dallas, Texas to assume all deposits of the failed bank. In addition, State Bank of Texas agreed to purchase approximately $626 million of the failed bank's assets. Since State Bank of Texas agreed to assume all deposits, 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 State Bank of Texas.
CD customers of The National Republic Bank of Chicago will have to wait to see what happens with their rates. According to FDIC’s Q&A:
Interest on deposits accrued through close of business on October 24, 2014 will be paid at your same rate. The National Republic Bank of Chicago’s rates will be reviewed by State Bank of Texas 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 State Bank of Texas.
No credit unions were liquidated this week. For this year there have been 10 credit union failures.
Below is the summary of the Friday bank failure:
16th Bank Failure of 2014 (5th in Illinois) (Oct 24)
- Closed Bank: The National Republic Bank of Chicago, Chicago, IL
- FDIC Press Release
- Size: 2 branches, $954.4 million in assets and $915.3 million in deposits
- Acquiring Bank: State Bank of Texas, Dallas, TX
- Possible Uninsured Deposits: all deposit accounts, excluding Cede & Co. deposits, have been assumed by State Bank of Texas (FDIC Q&A)
- Rate Changes: rates will be reviewed by State Bank of Texas and may be lowered (FDIC Q&A)
- Estimated Cost to Deposit Insurance Fund: $111.6 million
- Financial Ratings: 1 star at Bankrate.com, 0 stars at BauerFinancial, F & Texas Ratio of 318% 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 June 30, 2014 data.
- FDIC list of failed banks
- Evaluate the Financial Health of Your Bank or Credit Union
- 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