U.S. regulators close seven banks - 52 bank failures this year

[Guest guest]

Funny. I thought Obama said the economy was getting better.

Administrator

http://www.reuters.com/article/ousiv/idUSTRE56165S20090703

U.S. regulators close seven banks

Fri Jul 3, 2009 12:15am EDT

By JoAnne

WASHINGTON (Reuters) - U.S. bank regulators closed seven institutions on

Thursday, including six banks in Illinois controlled by one family and a small

bank in Dallas, bringing the total number of U.S. bank failures to 52 so far

this year.

Founders Bank, of Worth, Illinois, was the largest of the financial institutions

seized. The Federal Deposit Insurance Corp said Founders had $962.5 million in

assets and approximately $848.9 million in deposits.

The PrivateBank and Trust Co of Chicago (PVTB.O) will assume all of the deposits

of Founders Bank.

The failure is expected to cost the FDIC deposit insurance fund an estimated

$188.5 million.

The six failed Illinois banks were all controlled by one family and followed a

similar business model, the FDIC said. The failures were related to losses that

included soured investments in collateralized debt obligations.

According to a website of one of the Illinois banks, they were part of the

Group of privately owned banks.

Also on Thursday, the FDIC ordered City Bank (CTBK.O), of Lynnwood, Washington,

to cease and desist " operating with management whose policies and practices are

detrimental " to the bank and " jeopardize " deposits.

The FDIC said the community bank operated with inadequate capital, inadequate

loan valuation reserve and a large volume of poor quality loans.

Under the cease and desist agreement signed with the regulator and the state of

Washington, City Bank must produce a plan to reduce its nonperforming loans and

foreclosed real estate. The bank is also required to reduce the level of

brokered deposits, City Bank said.

The Federal Deposit Insurance Corp said the other bank closings in Illinois on

Thursday were:

-- First National Bank of Danville, with assets of $166 million and total

deposits of approximately $147 million. First Financial Bank, of Terre Haute,

Indiana will assume all the deposits of First National. The estimated cost of

the failure to the FDIC is $24 million.

-- State Bank in . It had total assets of $55.5 million and

total deposits of approximately $50.4 million. Galena State Bank and Trust of

Illinois, a unit of Heartland Financial (HTLF.O) assumes all of the deposits of

State Bank. Cost of the failure to the FDIC estimated to be $11.2

million.

-- Rock River Bank in Oregon, Illinois. Rock River had total assets of $77

million and total deposits of approximately $75.8 million. The Harvard State

Bank, of Harvard, Illinois, will assume all of the deposits. The failure will

cost the FDIC an estimated $27.6 million.

-- Warner Bank of Clinton. Warner had total assets of $70 million and

total deposits of about $64 million. State Bank of Lincoln is assuming all of

the Warner deposits. The cost to the FDIC is estimated to be $10 million.

-- First State Bank of Winchester. It had total assets of $36 million and total

deposits of about $34 million. The First National Bank of Beardstown, Illinois,

will assume the First State Deposits. The FDIC estimates the cost to the agency

will be $6 million.

Regulators also closed Millennium State Bank of Texas in Dallas. Millennium had

total assets of approximately $118 million and total deposits of $115 million,

the FDIC said.

State Bank of Texas will assume all of the deposits of Millennium. The failure

of Millennium will cost the FDIC an estimated $47 million.

The FDIC insures up to $250,000 per account at member institutions.

The agency has a running tally of problem banks that its examiners closely

monitor. At the end of the first quarter, 305 unidentified financial

institutions were on that list.

The FDIC has faced a sharp uptick in failed banks as loan portfolios continue to

deteriorate following the bursting of the housing bubble. In 2008 there were 25

bank failures, and just three in 2007.

(Additional reporting by Karey Wutkowski; Editing by Chang, Tim Dobbyn,

Hill and Walsh)