Three Banks Fail; Two Credit Unions Taken Over by NCUA

Three banks were closed by banking regulators on Friday, and two credit unions were taken over by the National Credit Union Administration (NCUA).

The three banks that failed were Teambank, N.A., Paola, KS; Colorado National Bank, Colorado Springs, CO; and FirstCity Bank, Stockbridge, GA. A total of 20 banks have failed so far this year.

The credit unions placed into conservatorship are U.S. Central Federal Credit Union, Lenexa, KS and Western Corporate (WesCorp) Federal Credit Union, San Dimas, CA.

Details, Next Steps

Teambank, a bank with $669.8 million in assets and deposits of $492.8 million was closed by the Office of the Comptroller of the Currency. FDIC was named receiver, and Great Southern Bank, Springfield, MO agreed to assume all of the failed bank's deposits.

The failed bank's 17 offices are now branches of Great Southern Bank. The acquiring bank assumed $474 million in deposits, paid $18.8 million to the broker and bought the failed bank's assets of $656.5 million at a discount of $100 million. The FDIC and Great Southern are in a loss-share transaction on $450 million of the assets. Cost to the FDIC Deposit Insurance Fund will be $98 million.

The Colorado National Bank was also closed on Friday by the OCC. The FDIC was appointed receiver, and it arranged for the deposits of the failed bank to be sold to Herring Bank, Amarillo, TX. The four offices of the failed bank are now branches of Herring Bank.

Herring Bank bought the deposits of $82.7 million and will buy $117.3 million in assets at a discount of $4.2 million. Herring Bank will pay a discount of 1.27 percent on the deposits. The FDIC and Herring Bank entered into a loss-share transaction, where the FDIC will share 80/20 percent in losses with Herring Bank on about $62 million in assets. The cost to the FDIC's Deposit Insurance Fund is $9 million. The two failed banks, Teambank and Colorado National Bank, were affiliated.

The FirstCity Bank was closed by the Georgia Department of Banking and Finance, and the FDIC was appointed receiver. The FDIC will provide payments to insured depositors beginning today. The failed bank had assets of $297 and deposits of $278 million. The bank had about $778,000 in deposits that exceeded insurance limits. The FDIC estimates the failure will cost its Deposit Insurance Fund $100 million.

The NCUA's Board put U.S. Central Federal Credit Union and Western Corporate (WesCorp) Federal Credit Union into conservatorship on Friday. Service continues uninterrupted for corporate members. The Federal Credit Union Act authorizes the NCUA Board to appoint itself conservator when necessary to conserve the assets of a federally insured credit union, preserve member assets and protect the National Credit Union Share Insurance Fund (NCUSIF).

Corporate credit unions do not serve consumers. They are chartered to provide products and services to the credit union system.

U.S. Central has approximately $34 billion in assets and 26 retail corporate credit union members. WesCorp has $23 billion in assets and approximately 1,100 retail credit union members. The member accounts of both credit unions are guaranteed under provisions of the previously announced NCUA Share Guarantee Program, through December 31, 2010. The Program extends NCUSIF coverage to all funds held by the two corporate credit unions.

About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.

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