Another bank with over $1 billion in assets failed. Last Friday, Guaranty Bank of Milwaukee, Wisconsin was closed by the OCC. This failure occurred only one week after the April 28th failure of First NBC Bank, a bank that had almost $5 billion in assets. The failure of Guaranty Bank is the fifth bank to fail in 2017. That number matches the total number of banks that failed in all of 2016. Every year since 2010 we’ve had fewer bank failures. That won’t be the case in 2017. In 2010, 157 banks failed which was the highest number of bank failures in a year since the 2008 financial crisis.
According to the FDIC, Guaranty Bank (which did business as BestBank in Georgia and Michigan) had “119 branches in five states, 107 of which were in retail outlets, such as grocery and general merchandise stores.” Guaranty Bank had $1.01 billion in total assets and $951 million in total deposits. It’s atypical for a bank with over 100 branches to have only $1 billion in assets. For example, First NBC Bank, that failed on April 28th, had almost $5 billion in assets with only 29 branches. The fact that 107 of Guaranty Bank branches were in retail outlets may be one reason why it had so few assets.
Another thing to note regarding the Guaranty Bank branches is that the in-store branches will not be reopened under a new bank. Guaranty Bank had more than 900 employees. It seems likely that a large majority of them won’t be employed by the acquiring bank. For deposit customers of Guaranty Bank, the FDIC listed ways they can access their money at these in-store branches:
Depositors with accounts at the 107 branches located in retail outlets, such as grocery stores and general merchandise stores, which are not reopening, have several options to access their money. If possible, they can go to one of the 12 brick-and-mortar branches located in Illinois, Minnesota or Wisconsin, or they can use electronic means for conducting their banking business, including online and mobile banking. ATM machines on-site at the branches in retail outlets will not be operational.
It appears these in-store branches did not have safe deposit boxes. According to the FDIC’s FAQs, “Customers may continue to access their safe deposit box during normal business hours. Any changes will be communicated by First-Citizens Bank & Trust Company.”
Other than the issue of these in-store branches, the closure of Guaranty Bank was typical in that the FDIC arranged for another bank to assume all deposits of the failed bank. The FDIC entered into a purchase and assumption agreement with First-Citizens Bank & Trust Company, of Raleigh, North Carolina. According to the FDIC’s 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 First-Citizens Bank & Trust Company.
Deposits that were transferred also included brokered deposits.
CD customers of Guaranty Bank may have their CD rates lowered. Here’s what the FDIC FAQs state on this issue:
Interest on deposits accrued through close of business on Friday, May 5, 2017 will be paid at your same rate. Guaranty Bank's (d/b/a BestBank) rates will be reviewed by First-Citizens Bank & Trust Company and may be adjusted; 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 First-Citizens Bank & Trust Company.
No other bank or credit union has failed since my bank failure post from last week. Below is the summary of the failed Guaranty Bank:
5th Bank Failure of 2017 (1st in Wisconsin) (May 5)
- Closed Bank: Guaranty Bank, Milwaukee, WI (did business as BestBank in GA and MI)
- FDIC Press Release
- Size: 119 branches, $1.01 billion in assets and $951.0 in deposits
- Acquiring Bank: First-Citizens Bank & Trust Company, Raleigh, NC
- Possible Uninsured Deposits: all deposit accounts, including brokered deposits, has been assumed by First-Citizens Bank & Trust Company. (FDIC Q&A)
- Rate Changes: Guaranty Bank's (d/b/a BestBank) rates will be reviewed by First-Citizens Bank & Trust Company and may be adjusted (FDIC Q&A)
- Estimated Cost to Deposit Insurance Fund: $146.4 million
- FDIC list of failed banks
- NCUA list of failed and conserved credit unions
- Evaluate the Financial Health of Your Bank or Credit Union
- Latest FDIC info on deposit insurance
- My bank failure review posts
- Review of the 2016 bank and credit union failures
- Review of the 2015 bank and credit union failures
- 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