Another Illinois Bank Failure
By Sean Stillmaker in News on Apr 9, 2011 4:00PM
A small town Illinois bank was shut down last night by government regulators. The Western Springs National Bank and Trust was seized last night by The Federal Deposit Insurance Corp. Operations will resume as normal today with everyone’s account intact and insured.
The bank’s $368.7 million in assets and deposits were picked up by Heartland Bank and Trust Co. in Bloomington, Ill. The FDIC and Heartland agreed to share losses of $100.8 million on the failed bank’s loans and assets.
Western Springs National Bank and Trust is the 28th bank to fail this year. The 2011 bank failure rate is slightly behind last year's numbers. At this time last year, 41 banks failed. A total of 157 banks failed in 2010 - the most seen since 1991 (127), according to the FDIC failed bank database.
In 2010 Florida had the highest bank failures with 29. Georgia placed 2nd with 21, Illinois in 3rd (16) and California in 4th (12). So far this year four Illinois banks have failed, which the FDIC swooped in to save.
Given the number of failed banks in the past year, how much longer can the FDIC insure failed banks? A simple answer is infinite because they’re backed by the Fed, and if they have to they’ll get more money. Their deposit insurance fund is at a record $20.7 billion deficit, but its on track to be funded at its minimum by 2017.
As long as no other too big to fail bank collapses the FDIC projects a slow recovery. In the meantime more small banks will fail and be taken over by others.
The Problem Bank List has gathered information of 884 banks on the FDIC’s “Problem Bank List, the largest number since 1993 (928). The list is not published, but it gives notices to banks that have serious deficiencies. Many end up in failure and taken over by the FDIC.
Six small Illinois banks have already filed their consent orders from the FDIC in regards to being problematic. Banks are typically seized on Friday nights, so keep an eye out the rest of the month (last year’s record was seven).