Mint, a personal finance software site, posted one of those time-span graphics that have become the rage in documenting the ravages of the recession. There was the dramatic Slate unemployment map posted in December. Now Mint has made a map of bank failures that looks like a slow-motion machine gun target. It’s occasional hits up to 2008 and then the Gatling gun come. In 2009 and 2010 ever larger red holes appear across the continent. In April 2009, boom, a red spot zooms up in norther Colorado. It’s the $2 billion failure of the New Frontier Bank of Greeley that left farmers and dairy owners struggling to find loans to finance the growing season. It was the second Colorado bank to go under, following the failure of Colorado National Bank in Colorado Springs. Watch it happen all over again.
As the Colorado Independent reported at the time, the Colorado Springs bank found a buyer and continued business as usual but the Greeley bank went under entirely, with depositors standing to lose more than $150 million because roughly 10 percent of the New Frontier Bank deposits were uninsured or over the FDIC’s $250,000 limit. Shutting down the bank was estimated to cost the FDIC’s Deposit Insurance Fund an estimated $670 million, regulators said.
New Frontier’s failure was fueled by an old-fashioned — and rarely seen — bank run. Amid rumors the bank was strapped for assets, and on top of lawsuits and bankruptcies involving Johnson Dairy, one of the bank’s largest customers, depositors drained the bank and brought it to the precipice.
After regulators ordered a personnel change in January, the Denver Post reported that “depositors withdrew an average of $13 million a week, 18 percent of the core deposits held at the bank when the year started.”
Hat tip Annie Lowery.