Despite aggressive efforts to stay alive, Midwest Bank and Trust Co. was closed late Friday by Illinois regulators.
The failure of the $3.2 billion-asset, Chicago-area bank came on a night when the Federal Deposit Insurance Corp. also found buyers for three other institutions, bringing the year's failure total to 72.
Midwest's collapse — brought on in part by losses tied to the government-sponsored enterprises — came despite its receiving bailout funds to address its capital needs.
The FDIC sold the bank's operations to $12 billion-asset FirstMerit Corp. in Akron, Ohio. The government's losses from the failure were estimated at $216 million.
The three other failed banks totaled $342 million of assets. They were: $136 million-asset Satilla Community Bank in Saint Marys, Ga., $109 million-asset New Liberty Bank in Plymouth, Mich., and $97 million-asset Southwest Community Bank in Springfield, Mo.
Together, the four failures were estimated to cost the FDIC about $300 million.
Like other institutions, Midwest, the bank subsidiary of Midwest Banc Holdings Inc., suffered sharp losses in its preferred stock holdings when the government's 2008 conservatorship of Fannie Mae and Freddie Mac depleted the GSEs' value. Midwest's problems were compounded by rising loan losses. In a Securities and Exchange Commission filing Thursday, the company said nonperforming assets had grown to more than 14% of its portfolio in the first quarter.
The bank did receive an $84.8 million infusion from Treasury's Troubled Asset Relief Program. But while that helped address its GSE woes, Tarp was not enough to fix the bank's other credit problems. Midwest also was the first community bank company to convince Treasury to convert its holdings to common equity. It struck a similar deal with other shareholders. But in the end, it was still short of the $250 million Midwest needed to recapitalize.
The FDIC said FirstMerit Bank agreed to assume all of Midwest's $2.4 billion in deposits, paying a 0.4% premium. FirstMerit will also take over virtually all of Midwest's assets, and share losses with the FDIC on $2.27 billion of those assets.
Meanwhile, the operations of Satilla Community were sold to Ameris Bank in Moultrie, Ga. The resolution was estimated to cost the Deposit Insurance Fund $31 million.
The FDIC said Ameris had agreed to assume all of the failed bank's $134 million in deposits — paying a 0.19% premium — and acquire essentially all of its assets. The buyer will share losses with the FDIC on $101 million of those assets.
Bank of Ann Arbor agreed to assume all of New Liberty's $102 million in deposits, as well as acquire essentially all of its assets. The acquirer and the FDIC will share losses on about $95 million of those assets. The failure was estimated to cost $25 million.
Southwest Community was sold to Simmons First National Bank in Pine Bluff, Ark. The buyer agreed to assume all $102 million in deposits and take over essentially all of the failed bank's assets. The FDIC and Simmons First National will share losses on $67 million of those assets. The government's cost from the failure was estimated at $29 million.