A small Minnesota bank failed on Friday which brings the number of failures in the fourth quarter to four. Only two banks failed in the third quarter. For the year a total of 18 banks have failed. Since next Friday is the day after Christmas, it’s a good chance that this will be the last bank failure for the year. Last year there had been 24 bank failures.
The small Minnesota bank that failed was Northern Star Bank in the town of Mankato. The Minnesota Department of Commerce closed the bank on Friday and appointed the FDIC as the receiver.
The closure of Northern Star Bank was typical in that the FDIC was able to find a buyer. The FDIC arranged for BankVista 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 BankVista.
CD customers of Northern Star 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 December 19, 2014 will be paid at your same rate. Northern Star Bank’s rates will be reviewed by BankVista 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 BankVista.
In an update to the unofficial problem bank list, the Calculated Risk blog has an interesting note about Minnesota and the states with the most bank failures since the financial crisis:
A total of 23 institutions headquartered in Minnesota have failed since the on-set of the Great Recession, which ranks fifth after Georgia (88), Florida (71), Illinois (61), and California (40).
Two small credit unions have been liquidated this month. For the year, the total number of liquidated credit unions is 12 which includes one privately insured credit union.
Both of the failed credit unions were located in Detroit, Michigan. Metropolitan Church of God Credit Union was the first to fail. It was a tiny credit union with only about $141,000 in assets. The NCUA wasn’t able to find another credit union to assume the deposits, but with only $141,000 in assets, it’s very likely that no member had over $250,000 in deposits.
The second failed credit union was larger. It was Health One Credit Union, and it had $14.5 million in assets. In this case the NCUA was able to find another credit union to assume all deposits. I had reported on this credit union back in 2013 and 2011 regarding its competitive 1-year CD. Its financial health had gone down during the two years from 2011 to 2013, and it continued to drop over the last year.
Below is the summary of the Friday bank failure and this month’s credit union failures:
18th Bank Failure of 2014 (1st in Minnesota) (December 19)
- Closed Bank: Northern Star Bank, Mankato, MN
- FDIC Press Release
- Size: 2 branches, $18.8 million in assets and $18.2 million in deposits
- Acquiring Bank: BankVista, Sartell, MN
- Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by BankVista (FDIC Q&A)
- Rate Changes: Northern Star Bank’s rates will be reviewed by BankVista and may be lowered (FDIC Q&A)
- Estimated Cost to Deposit Insurance Fund: $5.9 million
- Financial Ratings: 1 star at Bankrate.com, 0 stars at BauerFinancial, F & Texas Ratio of 139% at DepositAccounts.com (see financial rating note)
11th Credit Union Liquidation of 2014 (December 3)
- Liquidated CU: Metropolitan Church of God Credit Union of Detroit, MI
- NCUA Press Release
- Size: assets of approximately $141,000 and served 191 members
- Acquiring CU: None
12th Credit Union Liquidation of 2014 (December 12)
- Liquidated CU: Health One Credit Union of Detroit, MI
- NCUA Press Release
- Size: assets of approximately $14.5 million and served 3,664 members,
- Acquiring CU: New England Federal Credit Union of Williston, VT
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 and BauerFinancial are based on September 30, 2014 data. Ratings at Bankrate.com 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