Rebel Traders – Analysis Without The Hype

This last bank closes the round of five failed banks this week. It will be however noted that these are mostly “small” or regional banks and that they have been bought up by competitors, which gives a real illustration of the economic function of a recession: weeding out the unnecessary or unprofitable companies or individuals. In general, it is precisely the reason for which recessions are often followed by longer periods of economic growth.

While the number of 100 failed banks may seem a bit striking, it should not be forgotten that in the end, banks are businesses like any other. They also fail. Hence, the use of a guarantee mechanism like the FDIC. The issue could be when (and more importantly, “if”) the failed banks’ losses go beyond the financing capabilities of the FDIC.

FOR IMMEDIATE RELEASE
October 23, 2009

Riverview Community Bank, Otsego, Minnesota, was closed today by the Minnesota Department of Commerce, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Central Bank, Stillwater, Minnesota, to assume all of the deposits of Riverview Community Bank.

The two branches of Riverview Community Bank will reopen on Saturday as branches of Central Bank. Depositors of Riverview Community Bank will automatically become depositors of Central Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until Central Bank can fully integrate the deposit records of Riverview Community Bank.

This evening and over the weekend, depositors of Riverview Community Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of August 31, 2009, Riverview Community Bank had total assets of $108 million and total deposits of approximately $80 million. Central Bank did not pay the FDIC a premium to assume all of the deposits of Riverview Community Bank. In addition to assuming all of the deposits of the failed bank, Central Bank agreed to purchase essentially all of the assets.

The FDIC and Central Bank entered into a loss-share transaction on approximately $75 million of Riverview Community Bank’s assets. Central Bank will share in the losses on the assets covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers. For more information on loss share, please visit: http://www.fdic.gov/bank/individual/failed/lossshare/index.html.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-355-0814. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/riverview-mn.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $20 million. Central Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives. Riverview Community Bank is the 105th FDIC-insured institution to fail in the Nation this year, and the fifth in Minnesota. The last FDIC-insured institution closed in the state was Jennings State Bank, Spring Grove, on October 2, 2009.

FOR IMMEDIATE RELEASE
September 11, 2009

Brickwell Community Bank, Woodbury, Minnesota, was closed today by the Minnesota Department of Commerce, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with CorTrust Bank N.A., Mitchell, South Dakota, to assume all of the deposits of Brickwell Community Bank.

The sole branch of Brickwell Community Bank will reopen on Saturday as a branch of CorTrust Bank. Depositors of Brickwell Community Bank will automatically become depositors of CorTrust Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branch until CorTrust Bank can fully integrate the deposit records of Brickwell Community Bank.

This evening and over the weekend, depositors of Brickwell Community Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of July, 24, 2009, Brickwell Community Bank had total assets of $72 million and total deposits of approximately $63 million. CorTrust Bank will pay the FDIC a premium of 0.10 percent to assume all of the deposits of Brickwell Community Bank. In addition to assuming all of the deposits of the failed bank, CorTrust Bank agreed to purchase essentially all of the assets.

The FDIC and CorTrust Bank entered into a loss-share transaction on approximately $65 million of Brickwell Community Bank’s assets. CorTrust Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1- 800-815-0268. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/brickwell-mn.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $22 million. CorTrust Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives. Brickwell Community Bank is the 91st FDIC-insured institution to fail in the nation this year, and the third in Minnesota. The last FDIC-insured institution closed in the state was Mainstreet Bank, Forest Lake, on August 28, 2009.

FOR IMMEDIATE RELEASE
August 28, 2009

Mainstreet Bank, Forest Lake, Minnesota, was closed today by the Minnesota Department of Commerce, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Central Bank, Stillwater, Minnesota, to assume all of the deposits of Mainstreet Bank.

The eight branches of Mainstreet Bank will reopen on Saturday as branches of Central Bank. Depositors of Mainstreet Bank will automatically become depositors of Central Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until Central Bank can fully integrate the deposit records of Mainstreet Bank.

This evening and over the weekend, depositors of Mainstreet Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of June 30, 2009, Mainstreet Bank had total assets of $459 million and total deposits of approximately $434 million. Central Bank will pay the FDIC a premium of 0.10 percent to assume all of the deposits of Mainstreet Bank. In addition to assuming all of the deposits of the failed bank, Central Bank agreed to purchase essentially all of the assets.

The FDIC and Central Bank entered into a loss-share transaction on approximately $268 million of Mainstreet Bank’s assets. Central Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-405-7869. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/mainstreet-mn.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $95 million. Central Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives. Mainstreet Bank is the 83rd FDIC-insured institution to fail in the nation this year, and the second in Minnesota. The last FDIC-insured institution to be closed in the state was Horizon Bank, Pine City, on June 26, 2009.