Three more banks failed on Friday, bringing the 2009 tally to nine. When banks fail, the deposits (bank accounts) are transferred to another bank, sometimes with the FDIC facilitating the transition. Regardless of the process, bank accounts are generally insured by the FDIC up to $250,000 per depositor, so you won’t lose your money if you have an account at a bank that fails. In fact, most of the time, the transition is completely seamless. Old debit and ATM cards continue to work, you can still write checks.
The $250,000 limit is an increase over the previous limit of $100,000. The current law is scheduled to expire at the end of 2009, with limits returning to $100,000 next year. The law may be extended or even superseded by a new law that would increase the limit further.
Here are the latest banks to fail.
FirstBank Financial Services, McDonough, Georgia. Deposits here will now be held at Regions Bank, based in Birmingham, Alabama, and FirstBank’s branches will reopen as Regions branches.
Alliance Bank, Culver City, California. Deposits here will now be held at California Bank & Trust, based in San Diego, California, and Alliance’s branches will reopen as California B&T branches.
County Bank, Merced, California. Deposits here have been transferred to Westamerica Bank, based in San Rafael, California, and County’s branches are reopening today as Westamerica branches.
These banks were closed earlier this year:
- MagnetBank, Salt Lake City, Utah does not have a receiving bank, so the FDIC will be mailing checks to customers for their insured amounts.
- Suburban Federal Savings Bank, Crofton, MD has transferred its deposits to Bank of Essex, Tappahannock, VA.
- Ocala National Bank, Ocala, FL has transferred its deposits to CenterState Bank of Florida, National Association, Winter Haven, FL.
- 1st Centennial Bank, Redlands, CA has transferred its deposits to First California Bank, Westlake Village, CA.
- Bank of Clark County, Vancouver, WA has transferred its deposits to Umpqua Bank, Roseburg, OR.
- National Bank of Commerce, Berkeley, IL has transferred its deposits to Republic Bank of Chicago, Oak Brook, IL.
When deposits change hands, it’s usually uneventful. As you can see, occasionally, the FDIC cannot find a bank willing to take on a failed bank’s deposits. This is the case with MagnetBank. In cases like this, bank customers will have access to all their money within the insured limits, but there is a slight amount of hassle required to find a new bank.
We are only five weeks into 2009 and nine banks have already failed. Could that number be one hundred by the end of the year?