A small California bank failed on Friday which brings the number of failures in the fourth quarter to three. Only two banks failed in the third quarter. For the year a total of 17 banks have failed. At this time last year there had been 23 bank failures, and for all of 2013 there had been 24 bank failures.
The small California bank that failed was Frontier Bank, FSB in Palm Desert. It was doing business as El Paseo Bank. The Office of the Comptroller of the Currency (OCC) closed the bank on Friday and appointed the FDIC as the receiver.
The closure of Frontier Bank was typical in that the FDIC was able to find a buyer. The FDIC arranged for Bank of Southern California, N.A. to assume all deposits and to purchase essentially all assets of the failed bank. 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 Bank of Southern California, N.A.
CD customers of Frontier Bank 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 November 7, 2014 will be paid at your same rate. El Paseo Bank’s rates will be reviewed by Bank of Southern California, N.A. 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 Bank of Southern California, N.A.
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:
17th Bank Failure of 2014 (1st in California) (November 7)
- Closed Bank: Frontier Bank, FSB, Palm Desert, CA
- FDIC Press Release
- Size: 2 branches, $86.4 million in assets and $82.1 million in deposits
- Acquiring Bank: Bank of Southern California, N.A., San Diego, CA
- Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by Bank of Southern California, N.A. (FDIC Q&A)
- Rate Changes: all deposit accounts, including brokered deposits, have been assumed by Bank of Southern California, N.A. (FDIC Q&A)
- Estimated Cost to Deposit Insurance Fund: $4.7 million
- Financial Ratings: 1 star at Bankrate.com, 0 stars at BauerFinancial, C- & Texas Ratio of 72% 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