Two Bank Failures Cost FDIC $100 Million

The Illinois Department of Financial Professional Regulation on Friday shut down Glenwood, Ill.-based Heritage Community Bank and named as receiver the Federal Deposit Insurance Corp., which entered into a purchase and assumption agreement with MB Financial Bank of Chicago. The four Heritage offices reopened Saturday as branches of MB Financial Bank, which assumed all of the failed bank’s $218.6 million in deposits, including brokered deposits. MB Financial also agreed to purchase approximately $230.5 million of the failed bank’s $232.9 million in assets — at a $14.5 million discount. The FDIC said it had entered a loss-sharing agreement on some $181 million in assets covered by the agreement with MB Financial. The failed bank is estimated to cost the FDIC’s Deposit Insurance Fund some $41.6 million. The Nevada Financial Institutions Division on Friday shut down Henderson, Nev.-based Security Savings Bank and named as receiver the FDIC, which entered a purchase and assumption agreement with Las Vegas-based Bank of Nevada. The two Security Savings offices reopened Monday as branches of Bank of Nevada, which assumed all of the failed bank’s $175.2 million in deposits, including brokered deposits. Bank of Nevada also agreed to purchase approximately $111.3 million of the bank’s assets, which were estimated at $238.3 million at the end of December. The FDIC said the cost of the failed bank to the insurance fund will be $59.1 million. Together, the two closings cost the fund an estimated $100.7 million. With the eight other bank failures in February, the FDIC’s fund is out some $944.3 million in this month alone. The fund also lost between $789.1 million and $814.1 million from January closings, according to estimates made at the time. So far this year, the cost to the fund is at least $1.73 billion, according to the FDIC’s estimates. There were six bank closings in all of January alone in 2009; there had been one closing in January of 2008. Friday marked the ninth and 10th closings in February alone; in 2008, there were no closings in February at all. So far, 16 banks have closed this year in the same time it took for a single Kansas City, Mo.-based bank to close last year at a cost of approximately $5.6 million to the Deposit Insurance Fund. Write to Diana Golobay at [email protected].