The Federal Deposit Insurance Corporation announced the first failure of a bank during the coronavirus pandemic, though the bank was struggling before economic challenges began.
The West Virginia Division of Financial Institutions closed The First State Bank in Barboursville, West Virginia on Friday. MVB Bank of Fairmount acquired all of the bank’s deposit accounts.
FDIC said The First State Bank had approximately $152.4 million in total assets and $139.5 million in total deposits as of Dec. 31. In addition to assuming all of the deposits, MVB Bank agreed to purchase approximately $147.2 million of The First State Bank’s assets. The FDIC will retain the remaining assets for now.
Earlier this year, DepositAccounts.com had given the bank an “F” for its financial health, based on its Texas Ratio. The ratio takes the amount of a bank’s non-performing assets and divides them by the sum of its tangible common equity and its loan loss reserves.
Any bank with a Texas Ratio of greater than 100 percent is considered at risk. The First State Bank had the highest ratio of any bank in the nation at 1,050 percent, DepositAccounts.com reported.
Bank failures have slowed considerably since the Great Recession, according to the FDIC. There 25 failures in 2008, 140 in 2009, 157 in 2010, 92 in 2011 and 51 in 2012. Since the beginning of 2018, there have only been six, including The First State Bank.
The FDIC told First State Bank borrowers that the terms of their loans will not change and that they should continue to make payments as usual, including escrow payments. Borrowers who have a loan in process are advised to contact their loan officers.