WASHINGTON — The number of failures in 2009 continued to skyrocket on Thursday, as federal and state regulators shut seven banks, most of them in Illinois.
By Thursday evening the number of failures this year had reached 52 — more than double the total for 2008. The latest series of collapses came less than a week after regulators shut five banks in a single night and was the worst night for failures since October of 1992. Total failures this year have risen more than 30% since June 19, suggesting the pace of failures is increasing dramatically.
All told, the seven banks held approximately $1.5 billion in assets, and will cost the Deposit Insurance Fund $314 million.
Six of the failed banks were in Illinois, doubling the number of failures in that state this year to 12 in just one evening. In a press release, the FDIC said they were all controlled by one family and "followed a similar business model that created concentrated exposure in each institution."
"The failure of these banks resulted primarily from losses related to the banks' investment in collateralized debt obligations and other loan losses," the FDIC said.
The largest of the seven failures was $962.5 million-asset Founders Bank in Worth, which was also the most expensive collapse.
The FDIC said that PrivateBank and Trust Company of Chicago agreed to pay a 1.5% premium to buy all of the bank's $848.9 million of deposits, and approximately $888.4 million of assets.
Like most of the other failures on Thursday, the FDIC entered into a loss sharing agreement on approximately $617 million of the assets. The FDIC estimated the failure would cost $188.5 million to the DIF.
The first failure of the evening was $70 million-asset John Warner Bank in Clinton. State Bank of Lincoln paid a 4.1% premium to acquire all of John Warner Bank's $64 million in deposits and about $63 million of its assets, according to the Federal Deposit Insurance Corp.
The FDIC and State Bank of Lincoln entered into a loss-sharing transaction on approximately $31 million of John Warner Bank's assets. The FDIC estimated the bank's failure to cost the Deposit Insurance Fund $10 million.
John Warner Bank's failure was quickly followed by that of the $36 million-asset First State Bank of Winchester, also in Illinois. All of its $34 million in deposits were purchased by First National Bank of Beardstown, which paid a 2% premium. First National Bank agreed to purchase approximately $33 million of assets, and entered into a loss sharing agreement with the FDIC for $20 million of those assets.
The FDIC estimated First State Bank's failure would cost $6 million.
Regulators also shut the $77 million-asset Rock River Bank in Oregon, Ill. Harvard State Bank paid a 2% premium to acquire all of the bank's $75.8 million in deposits and agreed to buy $72.9 million of its assets. The FDIC said it had entered a loss-share transaction with Harvard on approximately $51.3 million of assets.
The Rock River failure was expensive, given the bank's size. The FDIC estimated it would cost $27.6 million — almost 36% of its asset size.
Later, the Office of the Comptroller of the Currency shut $166 million-asset The First National Bank of Danville, also in Illinois. First Financial Bank of Terre Haute, Indiana, agreed to pay a 5.36% premium to acquire all of the bank's $147 million of deposits, and approximately $148 million of its assets. The FDIC said it entered into a loss sharing agreement on approximately $97 million of Danville's assets. The FDIC said its failure would cost $24 million.
Illinois state regulators also shut $55.5 million asset The Elizabeth State Bank. Galena State Bank and Trust paid a 1% premium to acquire all of the $50.4 million in deposits at the failed bank and purchase $52.3 million of its assets. The FDIC said it entered into a loss-share transaction on approximately $44.5 million.
The failure is expected to cost $11.2 million.
In the midst of the failures in Illinois, Texas state regulators shut $118 million-asset Millennium State Bank of Texas in Dallas. State Bank of Texas in Irving agreed to purchase all $115 million of its deposits and essentially all of its assets.
The FDIC estimated its failure would cost $47 million.