Regulators closed the two subsidiaries of a $3.2 billion-asset banking company in Indiana on Friday, bringing the year's failure total to 94.
The failures of $2.7 billion-asset Irwin Union Bank and Trust Co., of Columbus, Ind., and $493 million-asset Irwin Union Bank, of Louisville, Ken., were estimated to cost the Deposit Insurance Fund a total of $850 million. Both institutions were owned by Irwin Financial Corp., located in Columbus.
All depositors in the two institutions were protected. The Federal Deposit Insurance Corp., appointed as the institutions' receiver, said their holdings were transferred to First Financial Bank in Hamilton, Ohio.
The company's failure comes amid a string of significantly-sized failures of institutions with over $1 billion in assets. Last Friday, regulators closed $7 billion-asset Corus Bank in Chicago. On Aug. 21, $13 billion-asset Guaranty Bank in Austin failed, and the Friday before that saw the failure of $25 billion Colonial Bank in Alabama.
Irwin Union B&T "was operating in an unsafe and unsound manner, and its failing liquidity position left the bank in imminent danger of insolvency," David H. Mills, the director of the Indiana Department of Financial Institutions, which closed the institution, said in a press release.
Irwin Union Bank, meanwhile, was closed by the Office of Thrift Supervision. The agency said in a release that the institution "was in an unsafe and unsound condition to conduct business because of its deteriorating asset quality, weak earnings and inability to develop an acceptable operating plan."
First Financial Bank agreed to assume all the deposits of both subsidiaries, and will pay a 1% premium to take over the operations of the larger institution. (Irwin Union B&T had $2.7 billion in deposits, and Irwin Union Bank had $441 million of deposits). The acquirer will also purchase virtually all of the two banks' assets, the FDIC said.
The FDIC and First Financial agreed to a loss-sharing plan for $2.5 billion of those assets.