For the first time in over a decade a Connecticut bank failed as regulators swooped in to close The Community’s Bank, with headquarters in Bridgeport, CT.
The Community’s Bank was a very small bank with only $26.3 million in assets that was floundering under an avalanche of nonperforming loans. Established in 2001 the Bank was the only minority-owned bank in the state and focused on lending in urban areas which proved to be unprofitable. Efforts by the Bank’s management to raise additional capital were unsuccessful and regulators were forced to close the insolvent bank.
Connecticut which was hit hard with 42 bank closings during the real estate bust of the early 1990′s was one of the few states that had no bank failures since the financial collapse that started in 2008.
The failure of The Community’s Bank was unusual in that the FDIC, appointed as receiver, was unable to find a buyer for the failed bank. The last time the FDIC could not find a buyer for a failed bank was in October 2012 when NOVA Bank failed. Over the past decade the FDIC was unable to find a purchaser for a failed bank on only 31 occasions.
When a failed bank is purchased by another bank, the acquiring bank almost always assumes all deposits of the failed bank and no depositor money is at risk. Due to the fact that The Community’s Bank was not purchased by another bank, the FDIC will make payouts to all depositors but only up to the FDIC deposit insurance limits. Depositors with account balances in excess of $250,000 may therefore face losses. The FDIC did not disclose the amount of uninsured deposits, if any, held by The Community’s Bank.
The FDIC will review all accounts over $250,000 to determine account ownership and insurance coverage. Any depositor with deposits over $250,000 can call the FDIC Call Center at 1-800-430-6165 to talk to a Claim Agent for further instructions. In addition, depositors with more than $250,000 in the bank will be able to determine their insurance coverage starting Monday by visiting the FDIC’s web page “Is My Account Fully Insured?”
As a convenience to depositors, the FDIC made arrangements with People’s United Bank of Bridgeport to accept the failed bank’s direct deposits for the next 90 days.
As of June 30, 2013, The Community’s Bank has total assets of $26.3 milion and total deposits of $25.7 million. The FDIC as receiver will retain all assets of the failed bank for later disposition.
The loss to the FDIC Deposit Insurance Fund is $7.8 million or 30% of total assets. The Community’s Bank becomes the nation’s 21st bank failure of 2013 and the first in Connecticut since June 26, 2002.