First State Bank Ratings had assigned First State Bank of Flagstaff an E-minus rating in March, which was a downgrade from an E-plus the previous quarter.

A $4.3 million net loss in the second quarter left First State Bank undercapitalized with a Tier 1 leverage ratio of 3.95% and a total risk-based capital ratio of 5.72% as of June 30. The bank's nonperforming assets ratio was 10.71%.

First State Bank had total assets of $105 million and $95 million in deposits. Because Monday is the Labor Day holiday, the failed bank's six branches were set to reopen Tuesday as branches of Sunwest Bank.

In addition to the branches and deposits, Sunwest acquired nearly all of First State's assets. The FDIC estimated the cost to its insurance fund would be $47 million.

Free Financial Strength Ratings

Including Platinum Community Bank, there have been eight failed institutions this year for which the FDIC was unable to find another institution to acquire deposits. Depositors with total balances exceeding FDIC insurance limits have lost money in five of those failures.

The FDIC's temporary increase of the basic individual deposit insurance limit to $250,000 has been extended through 2013, but the waiver of all limits on deposit insurance for non-interest-bearing checking accounts will end on June 30, 2010.

Even if your personal deposits are under FDIC insurance limits, you or someone you know are probably associated with a business, organization or government entity (such as a school district) with large deposits of somebody else's money in a local bank. In this environment, it is a very good idea to look into the health of your bank.

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