Bank failure in Illinois brings 2012 total to 43

AP News
Posted: Sep 28, 2012 7:59 PM
Bank failure in Illinois brings 2012 total to 43

WASHINGTON (AP) — Regulators shuttered a small bank in Illinois on Friday, bringing to 43 the number of U.S. bank failures this year.

The Federal Deposit Insurance Corp. said it seized First United Bank, based in Crete, Ill.

The bank had about $328.4 million in assets and $316.9 million in deposits as of June 30.

Old Plank Trail Community Bank NA, based in New Lenox, Ill., agreed to assume all the deposits and purchase essentially all of the failed lender's assets.

The FDIC and Old Plank Trail entered into a loss-share transaction on $172.7 million of First United's assets.

The failure of First United Bank, which had five branches, is expected to cost the deposit insurance fund $48.6 million.

First United is the seventh FDIC-insured institution in Illinois to fail this year.

U.S. bank closures are running at a slower pace than in 2011. By this time last year, 73 banks had failed.

Bank closures peaked in 2010 in the wake of the financial crisis, but have been declining ever since. In 2007, just three banks went under. That number jumped to 25 in 2008, after the meltdown, and ballooned to 140 in 2009.

In 2010 regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. The FDIC has said 2010 likely was the high-water mark for bank failures from the Great Recession.

From 2008 through 2011, bank failures cost the fund an estimated $88 billion. The deposit insurance fund fell into the red in 2009. But with failures slowing, the fund's balance turned positive in the second quarter of last year. By Dec. 31, it stood at $11.8 billion, according to the FDIC.

The FDIC expects failures from 2012 through 2016 to cost $12 billion.