Bank failures are becoming less common. A few years ago, we used to see several bank failures each month. As more time has passed from the financial crisis, the banking industry has been slowly improving, and the result is fewer bank failures. We had gone through March and April without a bank failure. We didn’t get through May. The fifth bank failure of the year occurred last Friday. The small Edgebrook Bank in Chicago, Illinois was closed by state regulators. It was the first bank failure since February 27th when Doral Bank failed. Last year at this time there had been six bank failures. At this time in 2010 there had been 68 bank failures. The worst year of bank failures since the last financial crisis was 2010. In that year a total of 157 banks failed.
The closure of Edgebrook Bank was typical in that the FDIC was able to find a buyer. The FDIC arranged for Republic Bank of Chicago to assume all of the deposits of the failed bank. Consequently, no depositor lost any money. According to the FDIC’s Q&A:
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 Republic Bank of Chicago.
CD customers of Edgebrook 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, May 8, 2015, will be paid at your same rate. Edgebrook Bank’s rates will be reviewed by Republic Bank of Chicago 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 Republic Bank of Chicago.
Since the Doral Bank failure, two credit unions have failed. The first to close was North Dade Community Development Federal Credit Union in Florida on March 31. This was a tiny credit union with 616 members and $3 million in assets. According to the NCUA’s press release, it decided to liquidate the credit union "after determining the credit union had violated various provisions of its charter, bylaws and federal regulation." I was able to find a few more details about the possible violations of federal regulation from the South Florida Business Journal:
Revenue from North Dade Community’s international business generated 90 percent of the credit union’s annual revenue, including $1.01 billion in outgoing wires and nearly $1 billion in remotely captured deposits, according to FinCEN.
NCUA did not arrange for another credit union to assume members’ deposits. Thus, deposits over $250K that were not insured may have been lost.
The second credit union failure since the Doral Bank failure occurred on April 30. That was the TLC Federal Credit Union in Oregon. This was a much larger credit union, with 13,375 members and $109 million in assets. The NCUA was able to find another credit union assume members’ deposits. According to the NCUA’s press release, "Fibre Federal Credit Union of Longview, Washington, immediately assumed TLC Federal Credit Union’s members, shares, loans and certain other assets and liabilities."
So far this year, three credit unions have been liquidated. There were 12 credit union liquidations in 2014.
Below is the summary of the Friday bank failure and recent credit union liquidations:
5th Bank Failure of 2015 (2nd in Illinois) (May 8)
- Closed Bank: Edgebrook Bank, Chicago, IL
- FDIC Press Release
- Size: 1 branch, $90.0 million in assets and $90.0 million in deposits
- Acquiring Bank: Republic Bank of Chicago, Oak Brook, IL
- Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by Republic Bank of Chicago (FDIC Q&A)
- Rate Changes: rates will be reviewed by Republic Bank of Chicago and may be lowered (FDIC Q&A)
- Estimated Cost to Deposit Insurance Fund: $16.8 million
- Financial Ratings: 1 star at Bankrate.com, ? stars at BauerFinancial, D & Texas Ratio of 180% at DepositAccounts.com (see financial rating note)
2nd Credit Union Liquidation of 2015 (March 31)
- Liquidated CU: North Dade Community Development Federal Credit Union of Miami Gardens, FL
- NCUA Press Release
- Size: assets of approximately $3 million and served 616 members
- Acquiring CU: None
3rd Credit Union Liquidation of 2015 (April 30)
- Liquidated CU: TLC Federal Credit Union of Tillamook, OR
- NCUA Press Release
- Size: assets of approximately $109 million and served 13,375 members
- Acquiring CU: Fibre Federal Credit Union of Longview, WA
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 are based on December 31, 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 2014 bank and credit union failures
- 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