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Update on 2015 Bank and Credit Union Failures - 8 Bank Failures So Far This Year

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Update on 2015 Bank and Credit Union Failures - 8 Bank Failures So Far This Year

After almost three months without any closures, two banks were closed by regulators on Friday. A few years ago, it was rare to go through a month without a bank closure. In fact, there were months in 2010 with over ten failures. So far this year, there have been bank failures in only half of the months.

The two banks that failed on Friday were Bank of Georgia and Hometown National Bank in Washington State. With these two closures the total number of bank failures for 2015 totals eight. At this time last year there had been 14 bank failures.

Both bank closures were typical in that the FDIC arranged for another bank to assume all deposits. In both cases, the FDIC stated that:

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 [the new bank].

CD customers of these two failed banks 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, October 2, 2015, will be paid at your same rate. [The failed bank]’s rates will be reviewed by [the acquiring 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 [the acquiring bank] .

In addition to these two banks, three credit unions have failed since the last bank failure. So far this year, seven credit unions have failed which is just one less than the total number of banks that have failed. The three credit unions were Lakeside Federal Credit Union of Hammond, Indiana; New Bethel Federal Credit Union of Portsmouth, Virginia; and SWC Credit Union of Tampa, Florida. All were small credit unions, but New Bethel and SWC were extremely small. In fact, New Bethel had total assets of just over $100,000. This may be an important reason why the NCUA was not able to find another credit union to take over these two. Thus, if members had over the NCUA coverage limits in these two failed credit unions, their deposits over the coverage limits may have been lost.

Please note that I’m not including conserved credit unions on this list. Two credit unions were recently placed into conservatorship under the NCUA. These two were Bethex Federal Credit Union and Montauk Credit Union. A conservatorship doesn't always mean the credit union will be liquidated. If the NCUA can get the credit union back into sound financial shape, a liquidation can be avoided. In this case, nothing happens to members’ deposits. However, if there are serious issues, a liquidation often occurs, and it can occur quickly. In these cases, members’ deposits over the NCUA limits are at risk. Thus, if your credit union is placed into conservatorship, it’s wise to quickly ensure all of your deposits at the credit union are under the NCUA limits.

Montauk Credit Union is one of four New York City credit unions that have large exposure to the taxi industry that is being pressured from app-based ridesharing services such as Uber. More information on this issue is available at this Reuters article.

Below is the summary of Friday’s bank failures and the recent credit union failures:

7th Bank Failure of 2015 (2nd in Georgia) (October 2)

  • Closed Bank: Bank of Georgia, Peachtree City, GA
  • FDIC Press Release
  • Size: 7 branches, $294.2 million in assets and $280.7 million in deposits
  • Acquiring Bank: Fidelity Bank, Atlanta, GA
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, has been assumed by Fidelity Bank (FDIC Q&A)
  • Rate Changes: rates will be reviewed by Fidelity Bank and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $23.2 million
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, F & Texas Ratio of 425.78% at DepositAccounts.com (see financial rating note)

8th Bank Failure of 2015 (1st in Washington) (October 2)

  • Closed Bank: Hometown National Bank, Longview, WA
  • FDIC Press Release
  • Size: 1 branch, $4.9 million in assets and $4.7 million in deposits
  • Acquiring Bank: Twin City Bank, Longview, WA
  • Possible Uninsured Deposits: all deposit accounts, including any brokered deposits, has been assumed by Twin City Bank (FDIC Q&A)
  • Rate Changes: rates will be reviewed by Twin City Bank and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $1.6 million
  • Financial Ratings: 1 star at Bankrate.com, ? stars at BauerFinancial, F & Texas Ratio of 22.68% at DepositAccounts.com (see financial rating note)

5th Credit Union Liquidation of 2015 (July 16)

  • Liquidated CU: Lakeside Federal Credit Union of Hammond, Indiana
  • NCUA Press Release
  • Size: assets of approximately $8.9 million and served 2,280 members
  • Acquiring CU: Teachers Credit Union of South Bend, IN

6th Credit Union Liquidation of 2015 (August 5)

  • Liquidated CU: New Bethel Federal Credit Union of Portsmouth, Virginia
  • NCUA Press Release
  • Size: assets of approximately $101,630 and served 172 members
  • Acquiring CU: None

7th Credit Union Liquidation of 2015 (September 24)

  • Liquidated CU: SWC Credit Union of Tampa, Florida
  • NCUA Press Release
  • Size: assets of approximately $1.9 million and served 309 members
  • Acquiring CU: None

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 June 30, 2015 data.

References:

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Anonymous   |     |   Comment #1
Under references--Latest FDIC on deposit insurance when I click on it --

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