The U.S. Federal Deposit Insurance Corp announced the closing of First State Bank of Barboursville

By Selena On Apr 5, 2020

FDIC officials said the failure was not connected to the recent economic shocks from the spread of the Coronavirus. But First State Bank still closed.

The First State Bank of Barboursville closed yesterday

State officials close The First State Bank in Barboursville, WV, which suffered financial difficulties since 2015. To protect depositors, FDIC entered into an agreement w/ @mvbbanking to assume all deposits; branches to reopen under normal business hours. https://t.co/v7F4HfpwiO

— FDIC Gov (@FDICgov) April 3, 2020

A small bank in West Virginia has failed and been taken over by the FDIC after experiencing difficulties since 2015 and its 2019 capital levels were too low, the Federal Deposit Insurance Corp.

The First State Bank of Barboursville, with $152 million in total assets, was closed Friday by the West Virginia Division of Financial Institutions. The bank’s $139.5 million in deposits will be acquired by MVB Bank Inc. of Fairmont, W.Va. The four branches of The First State Bank will reopen as branches of MVB Bank on Saturday.

MVB disclosed in a regulatory filing that it paid no premium for the deposits. It bought the branches for about $1.5 million. MVB said in its filing that it purchased the assets at a roughly $28.2 million discount to book value. The company said it bought some other real estate owned for 47.5% of their book value, the American Banker reported.

MVB Bank was founded in 1999 with headquarters located in Fairmont, West Virginia. It handles $2 billion in assets along with deposits totaling $1 billion.

The FDIC said on Twitter Friday:

This bank failure was not a result of the current health emergency. Financial issues were longstanding. This is very clear in our press release. https://t.co/4zefbHBAki

— FDIC Gov (@FDICgov) April 3, 2020

The FDIC said in a press release that the bank operated with “financial difficulties” since 2015, while agency data shows it hadn’t turned a profit since 2013. In 2019, the bank lost about $3.7 million. Its core capital leverage ratio hovered around 1.30%, much lower than the 11.68% average for banks with $100 million to $300 million in assets.

Gabor Gurbacs, a digital assets strategist at VanEck investments management firm, highlighted that the ‘cash-heavy’ profile of West Virginia may have contributed to this failure. According to Gurbacs, this collapse may be the first link in the sorrowful chain, and should:

FDIC announced the closure of First State Bank in West Virginia. West Virginia is a cash-heavy state. Expect smaller regional bank closures in cash-heavy states as people increasingly draw on cash deposits during the #COVID19 pandemic-induced restrictions.https://t.co/JKBcrjSEp5

— Gabor Gurbacs (@gaborgurbacs) April 4, 2020

Despite First State’s small size, the closing is expected to take a bite from the FDIC’s Deposit Insurance Fund. The FDIC estimated the failure would cost the DIF about $46.8 million, representing nearly a third of the bank’s assets. The hit is the largest since late 2017 when the failure of Washington Federal Bank for Savings in Chicago cost the DIF more than $80 million.

First State’s branches were expected to reopen as MVB locations on Saturday during regular business hours. But the agency pointed to guidance from the Centers for Disease Control and Prevention. It encouraged customers to follow “social distancing and utilize online and electronic banking capabilities” as the COVID-19 pandemic continues.

West Virginia issued a statewide stay-at-home order last week, leading the FDIC to advise depositors that they enter bank branches only if essential and after making an appointment with branch staff. During the “Great Recession” caused by the 2008 financial crisis, more than 400 banks shut down.

Some blockchain experts are sure that the COVID-19 outbreak raged amidst the decisive phase of multiple social conflicts within the modern global system. Qiao Wang, Messari co-founder and product director named four of them. According to Wang, one should own Bitcoin (BTC) and Gold in these uncertain times to protect their savings.

People don’t realize multiple societal conflicts are simultaneously nearing boiling point:

+ US vs China
+ capitalists vs socialists
+ progressives vs conservatives
+ millennials vs boomers

History shows gold is what you should own in times like this.

Same thesis for Bitcoin.

— Qiao Wang (@QWQiao) April 4, 2020

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