A worrisome banking situation arises in the United States. In a matter of seven days, three banks have failed. The latest victim is City National Bank of New Jersey located in Newark.
The past few years have not been easy for traditional banks. Their costs often outweigh profits, forcing them to make tough decisions. Those who simply cannot improve or innovate will ultimately meet their demise.
A Rough Patch for Smaller US Banks
In the US, three different banks have been shut down in the past week. A very worrisome trend, albeit none of them are “big” institutions by any means.
City National Bank of New Jersey was shut down by the Office of the Comptroller of the Currency. At the time, the institution had $120.6m in assets and $111.2m in deposits.
The bank’s three branches will continue to serve customers moving forward. That is made possible thanks to Industrial Bank in Washington, D.C.
This latter institution agreed to purchase the assets of City National and assume all of the banks’ deposits. A risky move, albeit it will offer some relief to the affected parties.
According to the ODD, the bank suffered from “substantial dissipation of assets and earnings”. The agency claims the bank’s operators committed unsound practices, without going into further details. City National also allegedly failed to submit a capital restoration plan.
In late October, two other banks in Ohio and Kentucky also failed. This further confirms the current landscape in the United States may force more institutions to merge in the near future.