The FDIC closed the second bank of 2012 to fail with no acquirer today. South Michigan Avenue became the focus of Friday evening activities to shutter the $71 million institution. The bank had been internally stressed for sometime and took a turn for the worse around the middle of 2011. New City was under capitalized as of December 2011 and had 36 percent of its lending assets in trouble in one form or another. The forensic report on this bank can be found here:
Note that IRA's Counterparty Quality Score (CQS) for this bank had dropped to a 1, the lowest score possible while still being alive. Observations of other more successful FDIC resolutions where the institution is sold to another healthier bank show this typically takes place when the institution still rates a CQS of 3 or 4, basically while there is still some meat on the bones worth buying. The healthiest institutions rate grades of 7 or 8.
Failures without an acquirer trigger the FDIC to begin mailing checks to the bank's insured depositors up to the insured amount of $250,000 per depositor and notifying all other creditors of the claims process for contacting the receivership. Claims to New City Bank's parent company, New City Bancorp, Inc. are to be directed to that firm. Instructions may be found in this FDIC press release: