Louisa Community Bank joined Enloe State Bank in Texas as 2019’s only two FDIC Insured banks to fail in this calendar year, costing the FDIC approximately $4.5 million in losses. The losses could have been even more had it not been for Farmers Bank Corporation stepping in.
The bank is based in nearby Catlettsburg, Kentucky and it announced that it will assume all of the deposits of Louisa Community Bank. In order to assure a smooth transition, Louisa Community Bank reopened as a branch of Kentucky Farmers Bank Corporation on Saturday, Oct. 26. Louisa Community Bank had approximately $30 million in total assets and $26.5 million in total deposits.
In a press release, the FDIC stated, “To protect depositors, the FDIC entered into a purchase and assumption agreement with Kentucky Farmers Bank Corporation in Catlettsburg, Kentucky, to assume all of the deposits of Louisa Community Bank.
Depositors of Louisa Community Bank will automatically become depositors of Kentucky Farmers Bank Corporation. Deposits will continue to be insured by the FDIC, so customers do not need to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits.
Customers of Louisa Community Bank should continue to use their existing branch until they receive notice from Kentucky Farmers Bank Corporation that it has completed systems changes to allow other Kentucky Farmers Bank Corporation branches to process their accounts as well. Compared to other alternatives, Kentucky Farmers Bank Corporation’s acquisition was the least costly resolution for the FDIC’s DIF. “
Two bank closings in 2019 is not an alarming figure. In fact, in the last 75 years, there were only a handful of years in which no FDIC insured bank has closed. Enloe State Bank closed at the end of May. In fact, at this pace, 2019 will be a relatively stable year. The FDIC usually has to work through about five bank closings on an annual basis.
The closing of Louisa Community Bank is a relatively minor cost compared to the average bank failure. Banks of this size are usually acquired by small to midsized banks before closing.
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