After almost three months of inactivity, the FDIC was back in action last night with the closure of a small Maryland bank. NBRS Financial was closed on Friday by state regulators. It was the 15th bank in the nation to fail this year, and the second one to fail in Maryland. 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 NBRS Financial is that it used to offer a reward checking account under the Kasasa brand. That ended in December of 2010 when it slashed rates. It appeared that NBRS Financial might have been hit with the label of "less than well capitalized" and forced to stay under the FDIC rate caps. This is one of the reasons to avoid unhealthy banks.
The closure of NBRS Financial was typical in that the FDIC was able to find a buyer. The FDIC arranged for Howard Bank of Ellicott City, Maryland to assume all deposits of NBRS Financial. In addition, Howard Bank agreed to purchase essentially all of NBRS Financial’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 Howard Bank.
CD customers of the NBRS Financial 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 Friday October 17, 2014 will be paid at your same rate. NBRS Financial’s rates will be reviewed by Howard 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 Howard Bank.
The NCUA has been more active than the FDIC over the last couple of months. Three credit unions have failed during this time. In September, two tiny credit unions were closed. The first one was Louden Depot Community Credit Union of Fairfield, Iowa. It had $5 million in assets and served 790 member. The second one was Republic Hose Employees Federal Credit Union of Youngstown, Ohio. It had assets of only $581,487 and served 455 members. The credit union that failed in October was a little larger. It was County & Municipal Employees Credit Union of Edinburg, Texas, and it had assets of $40.3 million and served 7,173 members.
Out of the three credit unions that were closed, only the tiny Republic Hose Employees Federal Credit Union didn’t have another credit union to assume all shares (deposits). Thus, members of Republic Hose Employees FCU may have lost uninsured deposits. However, NCUA data shows that the credit union only had a total of $545,000 in deposits. Thus, it’s unlikely that any one member had over $250,000 in deposits.
This year there has been a total of ten credit unions liquidated. Nine of those have been federally insured credit unions and one has been a credit union privately insured by ASI.
Below is the summary of the Friday bank failure and the credit union failures of the past two months:
15th Bank Failure of 2014 (2nd in Maryland) (Oct 17)
- Closed Bank: NBRS Financial, Rising Sun, MD
- FDIC Press Release
- Size: 5 branches, $188.2 million in assets and $183.1 million in deposits
- Acquiring Bank: Howard Bank, Ellicott City, MD
- Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by Howard Bank (FDIC Q&A)
- Rate Changes: rates will be reviewed by Howard Bank and may be lowered (FDIC Q&Q)
- Estimated Cost to Deposit Insurance Fund: $24.3 million
- Financial Ratings: 1 star at Bankrate.com, 0 stars at BauerFinancial, D & Texas Ratio of 145% at DepositAccounts.com (see financial rating note)
8th Credit Union Liquidation of 2014 (Sept 5)
- Liquidated CU: Louden Depot Community Credit Union of Fairfield, Iowa
- NCUA Press Release
- Size: assets of approximately $5 million and served 790 members
- Acquiring CU: Community 1st Credit Union of Ottumwa, Iowa
9th Credit Union Liquidation of 2014 (Sept 30)
- Liquidated CU: Republic Hose Employees Federal Credit Union of Youngstown, Ohio
- NCUA Press Release
- Size: served 455 members and had assets of $581,487
- Acquiring CU: None
10th Credit Union Liquidation of 2014 (Oct 10)
- Liquidated CU: County & Municipal Employees Credit Union of Edinburg, Texas
- NCUA Press Release
- Size: assets of $40.3 million and served 7,173 members
- Acquiring CU: Navy Army Community Credit Union of Corpus Christi, Texas
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