Regulators start fireworks early, closing seven more banks

Regulators shut down seven more banks Thursday in a pre-holiday sweep that pushed the number of failures this year to 52.


Six of the banks closed Thursday were in Illinois. According to the Federal Deposit Insurance Corp., all six were controlled by a single family and had similar business models that created a concentration of risk around collateralized debt obligations and other holdings.


The Illinois Department of Financial and Professional Regulation shut down Founders Bank, of Worth, Ill., and appointed the FDIC as receiver. It arranged for The PrivateBank and Trust Co. to assume the failed bank's 11 branches and roughly $849 million in deposits.


PrivateBank paid a 1.5 percent premium for the deposits. It also agreed to buy $888.4 million of the failed bank's assets, with $617 million of that amount subject to a loss-sharing deal with the FDIC.


Founders Bank had suffered heavy losses on securities and loans and had been ordered to raise $50 million in new capital. It was the biggest of the banks that were seized.


The others were First National Bank of Danville, in Danville, Ill.;  Elizabeth State Bank, in Elizabeth, Ill.; First State Bank of Winchester, in Winchester, Ill.;  Rock River Bank, of Oregon, Ill., John Warner Bank, of Clinton, Ill., and Millennium State Bank of Texas, in Dallas.


First National Bank of Danville's seven offices and $146 million in deposits were taken over by First Financial Bank N.A., of Terre Haute, Ind.


Elizabeth State Bank's branches and deposits were taken over by Galena State Bank and Trust, of Galena, Ill., while First State Bank of Winchester's operations were assumed by the First National Bank of Beardstown, in Beardstown, Ill.


Rock River Bank's branches and deposits were sold to Harvard State Bank, in Harvard, Ill., and John Warner Bank's operations were taken over by the State Bank of Lincoln, in Lincoln, Ill.


Millennium State Bank's lone office, its deposits and virtually all of its assets went to State Bank of Texas, in Irving.


The FDIC said the closings would cost its insurance fund around $314 million.

published July 2, 2009, 0 Comments

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Chris Carey, Editor

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This page contains a single entry by Chris Carey published on July 2, 2009 11:19 PM.

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