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Second Bank Failure of 2015 - Highland Community Bank in Illinois

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Second Bank Failure of 2015 - Highland Community Bank in Illinois

Highland Community Bank in Chicago was closed by state regulators on Friday marking the second bank failure of 2015. The small bank was almost rescued in 2013 when a deal to recapitalize the bank failed. This 2013 Crain's Chicago Business article reviews the bank’s past problems and rescue attempt. It’s interesting that it took this long for the FDIC and the Illinois regulator to close the bank.

The closure of Highland Community Bank of Chicago was typical in that the FDIC was able to find a buyer. The FDIC arranged for United Fidelity Bank, fsb of Evansville, Indiana, to assume all of the deposits and to purchase essentially all of the assets of Highland Community 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 United Fidelity Bank, fsb.

CD customers of Highland Community Bank will have to wait to see what happens with their rates. According to the FDIC’s Q&A:

Interest on deposits accrued through close of business on Friday, January 23, 2015, will be paid at your same rate. Highland Community Bank’s rates will be reviewed by United Fidelity Bank, fsb, 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 United Fidelity Bank, fsb.

Last year 18 banks failed. The number of bank failures has been declining since 2010 when 157 banks failed. That was the year of the most bank failures since the financial crisis of 2008. For more details, please refer to my review of the 2014 bank and credit union failures.

Below is the summary of the Friday bank failure:

2nd Bank Failure of 2015 (1st in Illinois) (January 23)

  • Closed Bank: Highland Community Bank, Chicago, IL
  • FDIC Press Release
  • Size: 2 branches, $54.7 million in assets and $53.5 million in deposits
  • Acquiring Bank: United Fidelity Bank, fsb, Evansville, IN
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by United Fidelity Bank, fsb (FDIC Q&A)
  • Rate Changes: rates will be reviewed by United Fidelity Bank, fsb, and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $5.8 million
  • Financial Ratings: 1 star at Bankrate.com, 0 stars at BauerFinancial, F & Texas Ratio of 149.54% 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 September 30, 2014 data.

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