Regulators take over two banks in Illinois

3 dozen institutions have failed this year

ASSOCIATED PRESS
2:00 a.m. May 23, 2009

Regulators yesterday shut down two more banks, boosting the number of federally insured bank failures this year to 36.

The latest banks seized were Strategic Capital Bank and Citizens National bank, both in Illinois. The Federal Deposit Insurance Corp. will continue to insure regular deposit accounts of up to $250,000 at both banks.

The Illinois Department of Financial and Professional Regulation's banking division took over Strategic Capital Bank, based in Champaign, Ill., while the Office of the Comptroller of the Currency took control of Citizens National Bank, based in Macomb, Ill. The FDIC was appointed receiver of both banks.

The closures brought this week's total to three, after regulators seized Florida thrift BankUnited FSB on Thursday. That closure was expected to cost the FDIC $4.9 billion, representing the second-largest hit to the FDIC's insurance fund since the financial crisis began felling banks last year.

The costliest was last year's seizure of California lender IndyMac Bank, on which the bank insurance fund is estimated to have lost $10.7 billion.
The closure of Strategic Capital Bank is expected to cost the FDIC $173 million, while Citizen National Bank's closure will cost about $106 million.

The FDIC said all of Strategic's deposits will be assumed by Midland States Bank, based in Effingham, Ill. In addition to acquiring the failed bank's deposits, Midland States Bank agreed to purchase about $536 million in assets.

Citizens National Bank had $437 million in assets and about $400 million in deposits as of May 13. The FDIC said a majority of the bank's deposits will be assumed by Morton Community Bank, based in Morton, Ill. Morton Community Bank also agreed to purchase about $240 million in assets.

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