United Fidelity Purchases Premier Assets: Sixth FDIC-Insured Bank Failure Of 2015

United Fidelity Bank has purchased customer assets in the sixth failure of a Federal Deposit Insurance Corporation-protected institution this year. The Colorado Department of Banking seized the assets of Premier Bank of Denver and appointed the FDIC as receiver, reports the Denver Business Journal. A press release issued by the FDIC reports that Premier Bank’s assets totaled $31.7 million, including $29.6 million in deposit accounts held by customers, as of March 31, 2015.

The United Fidelity move, and FDIC intervention, mitigates any risk to account holders. Customer deposits are safe and available with United Fidelity Bank of Indiana. Customers are advised that they may continue to access deposits through their Premier Bank branch until United Fidelity has made necessary infrastructure changes. The failure is the sixth of an FDIC-insured institution in 2015. At this point in 2014, 12 FDIC-insured banks had failed. The total was 18 by the end of 2014.

United Fidelity Bank was founded in 1914 and maintains a network of branches in the Evansville, Indiana area. United Fidelity Bank offers customer deposit accounts, certificates of deposit, credit cards, mortgages, and other lending services. United Fidelity is an FDIC-insured institution: in most instances this covers customer deposits up to $250,000.

United Fidelity Bank is a participant in the Certificate of Deposit Account Registry Service. This service represents a network of banks that work together to break amounts held by customers greater than individual FDIC insurance limits into smaller accounts, each held by banks like United Fidelity, registered with the service. This strategy stretches FDIC protection for higher net worth clients and is a time-consuming endeavor to duplicate on one’s own. The United Fidelity Bank service also provides a consolidated monthly statement detailing each insured investment.

The United Fidelity Bank purchase of the distressed Premier Bank assets marks a decreasing trend in bank failures. Here are the number of failures of FDIC-insured banks for the past 10 years.

  • 2005: 0
  • 2006: 0
  • 2007: 3
  • 2008: 25
  • 2009: 140
  • 2010: 157
  • 2011: 92
  • 2012: 51
  • 2013: 25
  • 2014: 18
  • 2015: 6 as of the United Fidelity asset purchase on July 10

The 2008/2009 spike is related to the effects of the securitization of sub-prime mortgages and undue risk many banks had allowed their firms to take on, something United Fidelity did not take part in. The resulting meltdown led to the bankruptcy of Lehman Brothers and near-bankruptcy of Bear Stearns, two of the oldest and most respected investment banking firms in America. Many Americans lost their homes and larges sums of capital in the debacle. Lower 2015 figures suggest that normalcy is being restored and that banks, such as United Fidelity, are well-positioned to move the banking system forward.

United Fidelity Bank and other banks that have weathered the sub-prime storm have done so by maintaining strong balance sheets and avoiding exposure to risky securitized mortgage assets. United Fidelity Bank is not associated with Fidelity Management and Research, another, and much larger, financial services company based in Boston, MA.

[Photo by Scott Olson/Getty Images]