Five Banks Collapse In Four States – 2012 Bank Failures Total 22 – Are Your Deposits Insured?

Regulators got back to work during the last week of April, closing five banks in four different states.  A total of 22 banks have failed this year compared to a total of 92 bank failures during 2011.  If the rate of bank failures for the first four months of the year is annualized, total bank closings during 2012 should approach 70.

The FDIC expects fewer bank failures this year compared to 2011, but the fragile condition of the U.S.economy and the ongoing banking crisis in Europe could dramatically change things for the worse.  In addition, although the larger U.S. banks have stabilized considerably compared to their dire condition during the height of the banking crisis, the number of banks on the Problem Bank List remains elevated.  At the end of 2011 there were a total of 813 banks on the FDIC Problem Bank List, considerably higher than the total of 702 banks at the end of 2009.

The five failed banks closed this week by regulators had total assets of $1.42 billion and resulted in losses to the FDIC Deposit Insurance Fund of $272.6 million.

Listed below are the five bank failures for the week ending April 27, 2012.  Please click on the links for detailed information on each bank closing.

1.  Bank of the Eastern Shore, Maryland – Bank Failure #18

The failure of Bank of the Eastern Shore, although not the week’s largest bank failure, was the most important one from the standpoint of depositors.  Since the FDIC was unable to find a buyer for the Bank, depositors who had money in excess of the FDIC insurance limits face potential losses.  When a failed bank is purchased by another bank from the FDIC, the acquiring bank will normally assume all deposits of the failed bank, protecting depositors regardless of deposit size.

A typical depositor cannot realistically be expected to accurately assess the financial condition of a bank. Nor would anyone be able to predict if the FDIC would be unable to sell a failed bank.  It is therefore very important for bank depositors to ensure that all of their bank deposits are covered by FDIC insurance.  For information on this topic, see Is My Cash Safe In The Bank?

2.  HarVest Bank of Maryland, Maryland – Bank Failure #19

After no bank closing since November 2010, Maryland gets hit with two bank closings in one day.

3. Inter Savings Bank, Minnesota – Bank Failure #20

Inter Savings Bank was the third bank closing in Minnesota this year and the second largest bank failure this week as measured by total assets of $481.6 million.

4. Plantation Federal Bank, South Carolina – Bank Failure #21

With total assets of $486.4 million, Plantation Federal was the largest bank failure of the week.  Plantation Federal had been in business for over 17 years.

5. Palm Desert National Bank, CA – Bank Failure #22

Palm Desert National Bank, established in 1981, was the smallest bank failure of the week with total assets of $125.8 million.