A second bank has failed this year as the federal insurer of bank deposits said Friday it closed a Kentucky institution at a cost of $4.5 million.
The Federal Deposit Insurance Corp. (FDIC) said it closed Louisa Community Bank in Louisa, Ky., Friday. The agency entered into a purchase and assumption (P&A) agreement with Kentucky Farmers Bank Corp. in Catlettsburg, Ky., to assume all of the deposits of Louisa Community Bank.
As of June 30, 2019, FDIC said, the Louisa bank had $29.7 million in total assets and $26.5 million in total deposits.
The agency said the $4.5 million cost to its Deposit Insurance Fund (DIF) through the P&A with Kentucky Farmers Bank, compared to other alternatives, “was the least costly resolution for the FDIC’s DIF.”
In late May, the FDIC announced the first bank failure of 2019, when it closed Enloe State Bank in Cooper, Texas, at a cost of $27.6 million, or 75% of the bank’s $37 million in total assets. The FDIC subsequently said the cause of the Texas bank failure was insider abuse and fraud by former officers of the institution.
At the time of Enloe’s failure, it was the first bank failure announced by the FDIC in 18 months. In 2018, there were no bank failures – the first year since 2006 in which no bank failures were recorded by the deposit insurer (there were also no failures in 2005, according to the FDIC).
In 2017, a total of eight banks closed their doors. In the 10-year period 2007-2017, there were 529 insured-institution failures, according to FDIC records. Most of those (468) occurred between 2008-12 – a period that included the height of the financial crisis.