Friday, December 15, 2017

Bank Failure: Washington Federal Bank for Savings

There has been another bank failure in the Chicago area. Insured deposits in Washington Federal Bank for Savings, $132 million in total, have been transferred to Royal Savings Bank. Royal Savings Bank apparently has not acquired any of the assets of the failed bank. It will operate the two banking locations starting tomorrow but has not committed to keeping them open.

The failed bank had been in business for a century. The O.C.C. closed it after finding that its capital had been depleted so that its liabilities were greater than its assets. The bank’s financial distress was not reflected on its financial statements, so it may be that it was holding phantom assets that had to be restated when the bank was examined.

Assuming this is the last bank failure of the year, eight U.S. banks failed in 2017, along with five credit unions. This represents a normal pace of bank failures.

Earlier today, the NCUA placed Louisville (Kentucky) Metro Police Officers Credit Union into conservatorship. The credit union has 3,564 members. The credit will continue to operate while the NCUA tries to correct problems in its operations.