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Broadway Bank, 6 Other Illinois Banks, Shut Down By FDIC

Broadway

STEVENSON JACOBS   04/23/10 09:32 PM ET   AP

NEW YORK Regulators on Friday shut down seven banks in Illinois, putting the number of U.S. bank failures this year at 57.

The Federal Deposit Insurance Corp. took over four banks in Chicago: New Century Bank, with $485.6 million in assets; Citizens Bank&Trust Company, with $77.3 million in assets; Broadway Bank, with $1.2 billion in assets; and Lincoln Park Savings Bank, with $199.9 million in assets.

The FDIC also took over Amcore Bank of Rockford, which had $3.8 billion in assets; Peotone Bank and Trust Company in Peotone, with $130.2 million in assets; and Wheatland Bank of Naperville, with $437.2 million in assets.

MB Financial Bank agreed to acquire the deposits of both Broadway Bank and New Century Bank. Republic Bank of Chicago agreed to assume Citizens' deposits, while Chicago-based Harris National Association agreed to acquire Amcore Bank's deposits.

Northbrook Bank and Trust Company of NorthBrook agreed to acquire the deposits of Lincoln Park Savings Bank. First Midwest Bank of Itasca agreed to assume Peotone Bank and Trust's deposits. Wheaton Bank & Trust will acquire the deposits of Wheatland Bank.

The failure of Broadway Bank is expected to cost the FDIC's deposit insurance fund $394.3 million. For the other banks, the estimated costs are: Amcore Bank, $220.3 million; New Century Bank, $125.3 million; Citizens Bank&Trust Company, $20.9 million; Lincoln Park Savings Bank, $48.4 million; Peotone Bank and Trust Company, $31.7 million; and Wheatland Bank, $133 million.

Broadway Bank was owned by the family of Illinois Treasurer Alexi Giannoulias, a Democrat who is running for President Barack Obama's old Senate seat. The bank was heavy into real estate loans and lost $75 million last year.

There were 140 bank failures in the U.S. last year, the highest annual tally since 1992 at the height of the savings and loan crisis. They cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008 and only three succumbed in 2007.

The number of bank failures likely will peak this year and will be slightly higher than in 2009, FDIC Chairman Sheila Bair said recently.

As losses have mounted on loans made for commercial property and development, the growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, hitting a $20.9 billion deficit as of Dec. 31.

The number of banks on the FDIC's confidential "problem" list jumped to 702 in the fourth quarter from 552 three months earlier, even as the industry squeezed out a small profit. Still, nearly one in every three banks reported a net loss for the latest quarter.

The FDIC expects the cost of resolving failed banks to grow to about $100 billion over the next four years.

The agency mandated last year that banks prepay about $45 billion in premiums, for 2010 through 2012, to replenish the insurance fund.

Depositors' money – insured up to $250,000 per account – is not at risk, with the FDIC backed by the government. Apart from the fund, the FDIC has about $66 billion in cash and securities available in reserve to cover losses at failed banks.

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Filed by Jen Sabella  |