FDIC to Lose $83 Million on Failed Bank
As some of the nation's largest banks rush to meet a deadline today to turn in sufficient capital-raising plans for the government's stress tests and others await regulators' permission to repay capital to the US Treasury Department, another failed community bank finds its operations spun off through receivership. After taking a week off, the Federal Deposit Insurance Corp. (FDIC) on Friday saw another bank failure hit its deposit insurance fund, putting $214m in total assets on the line for sale or disposition. The banking division of the Illinois Department of Financial and Professional Regulation shut down Bank of Lincolnwood as the extent of the damage from a weak economy continues to pressure the US banking industry. The bank had offered both home equity and mortgage loans, among other business segments. The FDIC became receiver of Bank of Lincolnwood and entered an agreement with Republic Bank of Chicago to assume all of the failed bank's deposits and $162m in assets. As of late May, Lincolnwood sported $214m in total assets and $202m in total deposits. Its impact on the FDIC's insurance fund is estimated around $83m. Bank of Lincolnwood's two offices reopened Saturday as branches of Republic Bank of Chicago. The news marks the latest in a string of busy Fridays in terms of closures. So far in 2009, 37 FDIC-insured banks failed, compared with four at the same time last year. Read the FDIC's statementon Lincolnwood. Write to Diana Golobay. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.