The largest banking failure of the year occurred when state regulators closed the First Cornerstone Bank, King of Prussia, PA. In order to protect depositors, the FDIC in its role as receiver, entered into a purchase and assumption agreement with First-Citizens Bank & Trust Company, Raleigh, North Carolina.
First Cornerstone Bank was established in March 2000 and by the time of its failure had grown to six branches with over $100 million in total assets. The Bank was locally owned and operated by a group of entrepreneurs who targeted their banking services to individuals and especially small businesses. According to the Bank’s website their primary mission was to fund local entrepreneurs and help local business and the community.
All of First Cornerstone Bank’s six branches will reopen as branches of First-Citizens and all depositors of the failed bank will automatically become depositors of First-Citizens. FDIC deposit insurance coverage will continue without interruption up to the applicable limits of coverage. All depositors of First Cornerstone Bank will have access to their money over the weekend through the use of checks, debit and ATM cards.
First Cornerstone Bank had total assets of $103.3 million as of March 31, 2016 and total deposits of $101.0 million. As purchaser of the failed bank, First-Citizens assumed all deposits of First Cornerstone as well as purchasing all of the failed bank’s assets.
Prior to the closing of First Cornerstone Bank, there have been two other banking failures during 2016. Total assets of all three failed banks amounted to $191.1 million and total losses to the FDIC Deposit Insurance Fund totaled $27.6 million. The number of banking failures has drastically declined from the dark days of the banking crisis during 2010 when 157 banks were closed. The number of banks failures has now declined every year since 2010.
Banking Failures Since 2008
Year Number of Bank Failures
The loss to the FDIC Deposit Insurance Fund from the failure of First Cornerstone Bank is $10.8 million. The last bank failure in Pennsylvania occurred during February 2014.