Less than a week after the failure of NetBank, federal regulators on Thursday announced the failure of an Ohio institution that also leaves some large depositors in limbo. The Ohio Superintendent of Financial Institutions and the Federal Deposit Insurance Corp. announced the $86.7 million Miami Valley Bank's closing and the transfer of its insured deposits to The Citizens Banking Co., of Sandusky, Ohio. TheStreet.com Ratings provided advance notice of Miami Valley Bank's weak condition, as its rating was downgraded to an E- (very weak financial strength) in June 2007. As with last week's
failure of NetBank (which is formerly a unit of NetBank Inc. ( NTBK)), Miami Valley customers with deposits exceeding FDIC insurance limits are on the hook. At the time it was closed down, Miami Valley Bank had about $14 million in uninsured deposits in 269 accounts. This time, however, the scenario may be more painful than the NetBank's closing. While NetBank's depositors received an immediate payout of 50 cents on the dollar for uninsured deposits, Miami Valley's depositors have received nothing so far. David Barr, the FDIC's assistant Director for Public Affairs, said that the quick sale of half of NetBank's assets enabled the agency to make the 50% payments immediately. None of Miami Valley Bank's assets have been sold yet.
With no improvement in asset quality in the second quarter, the bank lost another $5 million, and its total equity capital plummeted further to $5.4 million. Miami Valley's failure is another example of why it is so important to monitor the health of the bank or savings and loan institution that holds your money. TheStreet.com
Ratings Screener makes it easy to quickly check on the health of your bank free of charge. While most depositors are well within FDIC limits, consumers and small businesses still should be aware of the health of their financial institutions. It is quite easy for any small business to have more than $100,000 -- the maximum individual non-retirement deposit the FDIC will insure -- of working funds flowing through a bank. Also, almost all of the country's thousands of municipal entities, and thousands more organizations of all types, have bank deposits exceeding FDIC insurance limits.