Bank Closures Continue

I received a letter in the mail on Saturday from the FDIC stating that my bank, Amtrust Bank had been taken over by the FDIC on December 4, 2009 and as of January 1, 2010 my mortgage loan would be serviced by another bank.

Amtrust Bank was founded in 1889 and headquartered in Ohio. AmTrust Bank was the second largest thrift in the U.S., a subsidiary of New York Community Bancorp, Inc (NYCB). AmTrust Bank had 29 branches in northeast Ohio, 25 branches in Southern Florida, and 12 branches in Phoenix Arizona, 124 branches in New York and 53 branches in New Jersey totaling 243 branch offices. AmTrust bank had approximately $42 billion in assets.

As a personal finance expert and coach I assumed I was immune from my mortgage company closing. Amtrust was a bank for boasted of customers with good credit; they provided large loans to investors and other companies. They had a good track record and financial reports, and they had been in business for over 120 years - yet they too fall into the trap of greed and profit and lost their focus. They have been added to the list of FDIC bank closures which totals 140 so far in 2009.

If you are a customer of Amtrust visit their website or contact the FDIC to get more information about your account. Here are 10 tips to help you if your bank has closed or gone bankrupt.

1. Call the FDIC or visit their website to get information about your bank if it was FDIC insured.

2. Check with your bank to get the status of any outstanding checks written to your old bank.

3. Contact the new bank to ask about the status of your account and verify your account balance and standing.

4. Always have at least $100 in cash on hand in the event your bank closes and you are not allowed to access your account.

5. Don't wait until the last minute to pay bills, pay bills at least 7-10 days before the due date.

6. Have multiple bank accounts (checking and savings) so if a problem occurs with one account you can access the other account and still conduct transactions if needed.

7. Do business with FDIC insured banks only.

8. Consider opening an account with a credit union.

9. Look at the bank or mortgage company's financial history for the past five years. If the company revenue has been steadily declining you might want to consider switching banks.

10. Perform bank transactions early in the morning. This ensures your deposit will be applied the same day. Don't wait until the last minute to make transactions; this increases the chance that your transaction may not be applied to your account the same day and may cause a check to bounce.

Most banks that fail are taken over by the FDIC but not all. The FDIC provides information to customers about their accounts and loans and contact information regarding bank failures. Although the recession has ended the banking industry is still feeling the effects. Since January 1, 2009, ninety-nine banks have failed. A total of 24 banks failed in July 2009, 15 in August 2009 and 11 in September 2009.

The latest bank failure was the San Joaquin Bank in Bakersfield, CA on October 16, 2009. All deposit accounts were transferred to Citizens Business Bank, Ontario, CA. On Monday, October 19, 2009, the former San Joaquin Bank locations will reopen as branches of Citizens Business Bank.

Other banks that closed in October 2009 were Southern Colorado National Bank in Pueblo, CO; Jennings State Bank, Spring Grove, MN and Warren Bank, Warren, MI.

When a bank fails the FDIC acts as the insurer of the bank’s deposits and pays insurance to the depositors up to the insurance limit. The FDIC also acts as the receiver of the failed bank and sells or collects the assets of the failed bank and settles its debts.

The total amount insured per depositor per bank is $250,000 which includes principal and accrued interest on the account. The types of deposits insured are: savings, checking, NOW account, money market deposit accounts and certificate of deposits.

Any person or business is entitled to FDIC insurance on a deposit. The depositor does not have to be a U.S. citizen or a resident of the United States. This is why many foreign investors are able to deposit money in U.S. banks and why many of the foreign depositors were angry about the banking industry failure.

If a bank fails the FDIC notifies each depositor in writing. If a failed bank is acquired by another bank, the new bank notifies the depositors of the change.

I moved most of my accounts to my credit union. I prefer credit unions and am much happier with the customer service I receive. Consider moving at least part of your money to a credit union account so in the event your bank does fail in the future you will still be able to access cash quickly.

Safe Banks in 2009

A total of over 77 banks have closed in 2009 and counting. According to Dick (Richard Bove), a financial analyst for Rochdale Securities who has been the securities business since 1965 another 150 to 200 banks fail. In 2008, he was ranked by Zacks as the top financial analyst in the country.

He created a list called Bove's List which I talked about in my blog on July 20, 2008 entitled, "Check to See if Your Bank is on Bove's List". Some of the banks listed in his March 2008 report have closed or are still in financial trouble. Bove has identified 8 banks that he likes. The banks are: Bank of NY Mellon, Northern Trust, State Street, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and JP Chase Morgan.

As a comparison, in 1987, the FDIC listed 1,575 problem banks and more than 10% of the banks were on the FDIC problem list. In 1987, 184 banks failed. The FDIC reports that number of troubled banks 252, soared during the fourth quarter of 2008 to the highest level since 1994.

BankUnited FSB is the largest bank failure in 2009 in terms of the percentage loss on failed bank’s assets. The two previous largest bank failures in the history of banking, in terms of loss to the FDIC, were Indy Mac Bank in July 2008 and American S&L in September 1988.

According to a Global Finance banks across the world were ranked. In the study 50 of the world's safest banks are identified. One bank in the US was listed in the top 20, Bank of NY Mellon (BK). Wells Fargo was also listed in the top 50 and in another report was listed as the best consumer internet bank. Other banks listed in the top 50 safest banks were US Bancorp and BB&T.

Here are 4 tips to help you research your bank's health.

1. If you bank has closed check the FDIC website to see if it is FDIC insured.

2. Move at least some of your money to a credit union or a smaller bank or banks such as PNC or BB&T that did not invest in the sub-prime mortgage loans.

3. Do research on your current banks and look at the earnings over the past two to three years as well as the number of branches that have closed.

4. Put your money in more than one bank. As your grandmother used to say "never leave all your eggs in one basket."

The following banks closed in 2009.

Guaranty Bank

CapitalSouth Bank

First Coweta Bank

ebank

Community Bank of Nevada

Community Bank of Arizona

Union Bank, National Association

Colonial Bank

Dwelling House Savings and Loan Association

Community First Bank

Community National Bank of Sarasota County

First State Bank

Mutual Bank

First BankAmericano

Peoples Community Bank

Integrity Bank

First State Bank of Altus

Security Bank of Jones County

Security Bank of Houston County

Security Bank of Bibb County

Security Bank of North Metro

Security Bank of North Fulton

Security Bank of Gwinnett County

Waterford Village Bank

Temecula Valley Bank

Vineyard Bank

BankFirst

First Piedmont Bank

Bank of Wyoming

Founders Bank

Millennium State Bank of Texas

First National Bank of Danville

Elizabeth State Bank

Rock River Bank

First State Bank of Winchester

John Warner Bank

Mirae Bank

MetroPacific Bank

Horizon Bank

Neighborhood Community Bank

Community Bank of West Georgia

First National Bank of Anthony

Cooperative Bank

Southern Community Bank

Bank of Lincolnwood

Citizens National Bank

Strategic Capital Bank

BankUnited, FSB

Westsound Bank

America West Bank

Citizens Community Bank

Silverton Bank, NA

First Bank of Idaho

First Bank of Beverly Hills

Michigan Heritage Bank

American Southern Bank

Great Basin Bank of Nevada

American Sterling Bank

New Frontier Bank

Cape Fear Bank

Omni National Bank

TeamBank, NA

Colorado National Bank

FirstCity Bank

Freedom Bank of Georgia

Security Savings Bank

Heritage Community Bank

Silver Falls Bank

Pinnacle Bank of Oregon

Corn Belt Bank & Trust Co.

Riverside Bank of the Gulf Coast

Sherman County Bank

County Bank

Alliance Bank

FirstBank Financial Services

Ocala National Bank

Suburban FSB

MagnetBank

1st Centennial Bank

Bank of Clark County

National Bank of Commerce

Wachoiva : Another Bank Failure and How it Affects You

Wachovia was seized by the government and on September 29, 2008, and was bought by Citigroup. Wachovia has 3,300 retail offices in 21 states with 40 international offices. Citigroup will pay Wachovia $2.1 billion to pay for its subordinated debt (a debt obligation whose holder is placed in precedence below secured and general creditors) which basically means the debts bought by Citigroup will be paid after Wachovia's secured debt and debt owed to their creditors is paid. It will also assume $53 billion of Wachovia senior and subordinated debt. The buy will make Citigroup the largest bank in the US. The buy should be complete by the end of 2008.

Wachovia states that "Customers of both companies should continue banking as usual, and feel confident that their deposits are secure. Also, employees and vendors should continue to operate business as usual."

To down play the severity of the buy of Wachovia by Citigroup they use terms that the average consumer may not understand. When you visit the Wachovia website a blurb states "Wachovia announces bank subsidiary divestitures to Citigroup."

What does this mean? I am a customer of Wachovia and it saddens me that messages like this appear. Press releases and other messages should be explained in a manner so that all customers of Wachovia understand exactly what the buy by Citigroup means to them.
Divestitures are the sales of business holdings of a company. Citigroup purchased the retail bank, corporate and investment bank and wealth management businesses (divestitures) of Wachovia.

Wachovia investors will receive approximately $1 of Citigroup stock for each of their Wachovia shares of stock. For now, it appears that it is business as usual at Wachovia so don't take your money out of the bank.

Some Wachovia bank branches may close within the next year when Citigroup takes over the 3,300 retail offices. This will have a devasting effect on the Charlotte area where Wachovia is headquartered.

I advise all Wachovia customers to keep an eye on their account balances and monitor the behavior of your local branch staff to see if they started acting differently or see if you can pick up on hints about the health of the company.

IndyMac Closing - How Does This Affect You

On Friday, July 11, 2008 one of the largest banks in the county IndyMac, sadly closed its door. Customers were turned away and forced to wait until Monday to make their transactions. This is the second largest failure of a financial institution. On July 14, 2008, the bank will be taken over by the FDIC. Customers who have $100,000 or less in the bank will be able to get their money bank. Customers who have more may only get a portion of their money bank. This action brings more light to the economic crisis our country is experiencing. Take heed to this and start changing your spending habits and develop a plan to protect yourself. Here are 6 ways to protect your money.

1. Research. Look at the bank or mortgage company's financial history for the past five years. If the company revenue has been steadily declining you might want to consider switching companies.

2. Negotiate. Call your bank or mortgage company to find out what would happen if the business went under and what are your options. Develop a plan to protect yourself.

3. Diversify. Make sure your bank is FDIC insured. If not, move your money to a bank that is. If you have more than $100,000 in your bank, split the account into multiple accounts. Open additional accounts at others banks to keep the balance below $100,000.

4. Plan. Consider buying a safe for your home or apartment and keeping some money in your safe in the event your bank closes and you need to access money quickly.

5. Protect. Pay bills on time or before time. Don't wait until the last minute to pay a bill because with this economy you never know what may happen and you increase the chance that you may be charged a late fee.

6. Deposit. Perform bank transactions early in the morning. This ensures your deposit will be applied the same day. Don't wait until the last minute to make transactions, this increases the chance that your transaction may not be applied to your account the same day and may cause a check to bounce.