Fidelity Bank of Dearborn, Michigan, was closed today by the Michigan Office of Financial and Insurance Regulation which appointed the FDIC as receiver.
Fidelity Bank, owned by holding company parent Dearborn Bancorp, Inc. was established in 1994 and had a total of 15 branches. According to the failed Bank’s website, Fidelity Bank is the only commercial bank headquartered in Dearborn, MI. The Bank operated in four different counties and offered a full range of banking services and financial products.
Fidelity was a relatively large bank with over $800 million in assets at the time of its failure and ranked 25th for deposit marketshare in the Dearborn area. The Bank has been under the close scrutiny of regulators for some time. In February 2010, Fidelity signed a consent order in which the FDIC detailed the “unsafe or unsound banking practices and violations of law alleged to have been committed by the Bank.”
The Bank was unable to raise additional capital as required by the Consent Order and continued loan defaults resulted in a troubled asset ratio of 125%. Almost without exception, bank failure is the ultimate ending for a bank with a troubled asset ratio in excess of 100%.
Due to continued losses, Fidelity Bank’s parent holding company, Dearborn Bancorp, was delisted from the NASDAQ in November 2011. Trading in Dearborn Bancorp continued on the “pink sheets” and the stock closed today at 15 cents per share. In 2005, Dearnborn Bancorp had traded as high as $25 per share. Based on the number of outstanding shares, the total loss to shareholders of Dearborn Bancorp amounts to over $190 million.
Fidelity Bank was sold by the FDIC to The Huntington National Bank, Columbus, Ohio, which will assume all of the deposits of Fidelity Bank. All 15 branches of Fidelity will reopen on Saturday as branches of The Huntington National Bank and all depositors of the failed bank will automatically become depositors of The Huntington Bank. All deposits of the failed Bank will continue to be covered by FDIC deposit insurance up to the applicable limits.
Over the weekend, depositors of Fidelity Bank will continue to have full access to their money through the use of checks, ATM and debit cards.
At December 31, 2011, Fidelity Bank had total assets of $818.2 million and total deposits of $747.6 million. The Huntington Bank agreed to purchase all of the assets of failed Fidelity Bank. The Huntington National Bank is profitable, extremely well capitalized and has over $54 billion in assets.
With today’s purchase of Fidelity Bank, The Huntington Bank has now completed two failed bank acquisitions. In October 2009, Huntington purchased failed Warren Bank of Warren, MI, which had $538 million in assets.
The cost to the FDIC Deposit Insurance Fund is $92.8 million. Fidelity Bank is the nation’s 16th banking failure of the year and the first in Michigan. The last banking failure in Michigan prior to today was Community Central Bank of Mount Clemens, which failed in April 2011.