Huntington Buys Failed Bank Fidelity in Michigan

The 15 branches of Fidelity Bank, Dearborn, Michigan were closed with The Huntington National Bank, Columbus, Ohio, to assume all of the deposits. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $92.8 million.

Fidelity founded February 28, 1994, had 184 full time employees at their two offices in Southfield, and other offices in Auburn Hills, Birmingham, Birmingham Farms, Bloomfield Township, Canton, Dearborn, Dearborn Heights, Plymouth, Saline, Southgate, and Township.

Fidelity Bank’s parent holding company, Dearborn Bancorp, was delisted from the NASDAQ in November 2011; last trade on “pink sheets” was 15 cents a share. Dearborn Bancorp had traded as high as $25 per share in better days. Based on the number of outstanding shares, the total loss to shareholders of Dearborn Bancorp amounts to over $190 million.

Not long after the stock delisting, on January 6, 2012, the FDIC told the bank it was “critically undercapitalized.” While the year-end 2012 showed Fidelity’s first profit in four years, $1.6 million, it did not tell the entire story: the non-current loans were still very high, not changing much from $68.9 million in 2010 to $66.9 million year-end 2011. Perhaps also in alarm were the 30-to-89 day non-current loans, going from $18.6 million to $30.5 million. (1)

In reality, the bank had been given a 90 day warning to raise capital on January 6, but had very little chance being delisted in November and stock selling at 15 cents. Despite the year-end profit and a Tier 1 risk-based capital ratio 5.73%, it was the end as the non-current loans, coupled with the growing charge offs, high unemployment, and continued home foreclosures, the bank was not going to make it without additional capital.

(in millions, unless otherwise)

(Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.)

2006 -$23,000 ($48,000 commercial and industrial loans, $-39,000 1- 4 family, – $10,000 nonfarm, -$18,000 lease financing,-$4,000 individuals)
2007 $4.7 ($3 construction/land, $1 nonfarm nonres, $525,000 1-4 family, $18,000 indiv.)
2008 $16.5 ($6.9 construction/land, $3.1 commercial, $2.4 multi-family, $2.4 nonfarm)
2009 – $24.4 ($13.5 construction/land, $6 nonfarm nonres, $2.6 1-4 family, $521,000 commercial, $187,000 farmland, $183,000 individuals)
2010 $23.1 ($11.3 construction/land, $4.5 nonfarm nonres., $3.5 1-4 family, $2 multi-family, $1.5 commercial/industrial, $187,000
individuals)

(In millions, unless otherwise)

Net Equity
2006 $85.2
2007 $145.0
2008 $110.9
2009 $50.1
2010 $35.5
2011 $39.5

Profit
2006 $8.3
2007 $4.3
2008 -$30.8
2009 -$60.5
2010 -$13.6
2011 $1.6

Non-Current Loans
2006 $7.6
2007 $19.0
2008 $52.1
2009 $55.0
2010 $68.9
2011 $66.9

This is the second failed bank purchase for Huntington, who in October, 2009, purchased failed Warren Bank of Warren, MI, which had $538 million in assets. As of December 31, 2011, Fidelity Bank had approximately $818.2 million in total assets and $747.6 million in total deposits. In addition to assuming all of the deposits of the failed bank.

Stephen D. Steinour
Chairman, President, Chief Executive Officer

“We are pleased to welcome the more than 18,000 customers of Fidelity Bank to Huntington, which has been a leader in investing in Michigan,” Stephen D. Steinour, chairman, president, and chief executive officer of Huntington was quoted in an official press release.

“Today’s announcement is a continuation of Huntington’s ongoing investment in Michigan. In June 2011, the bank committed $2 billion in lending to Michigan businesses. More than $1 billion of the money has already been lent. Earlier this month, the bank committed $100 million to affordable housing in Michigan that is aimed at helping families throughout the state.

“… customers will continue to conduct banking business at their existing banking offices with familiar employees. Then beginning on April 13, 2012, customers will have access to Huntington’s entire 1,300 ATM network throughout the Midwest, with no service charge, including the 52 ATMs in East Michigan. Then in late June, their existing accounts will be converted to Huntington’s systems.”

http://www.investquest.com/iq/h/hban/ne/finnews/hban033012.htm

(1) http://us1.irabankratings.com/pub/failedbank.asp?cert=33883

http://www.fdic.gov/news/news/press/2012/pr12038.html

List of Bank Failures:
http://www.fdic.gov/bank/individual/failed/banklist.html

Bank Beat:
http://www.leasingnews.org/Conscious-Top%20Stories/Bank_Beat.htm