Republic Bank takes over Bank of Lincolnwood - 6th bank to fail in illinois

Republic Bank takes over Bank of Lincolnwood - 6th bank to fail in illinois
By Becky Yerak
Copyright © 2009, Chicago Tribune
June 6, 2009
http://www.chicagotribune.com/business/chi-bank-of-lincolnwood-republic-090605,0,83002.story


Bank of Lincolnwood, which has two offices and $214 million in assets, was closed today by state and federal regulators, becoming the 37th to fail nationwide this year and the sixth in Illinois.

Republic Bank of Chicago, Oak Brook, will assume all $202 million in deposits of Bank of Lincolnwood.

The Federal Deposit Insurance Corp. estimates that the cost to its insurance fund will be $83 million.

The shutdown comes less than two months after regulators ordered the bank to improve its banking and management practices, including to stop engaging in "hazardous lending and lax collection practices." The bank also was told to stop operating with inadequate capital for the kind of lending it does and with management whose policies jeopardize the safety of deposits. Regulators ordered the bank not to extend additional credit to any borrower whose loans have been classified as "substandard" or "doubtful," and to improve its liquidity and boost capital levels.

The bank's board members include Clyde Engle, former chairman. Under the order, Engle had no lending authority at the bank, no authority to transfer bank funds to any person and no authority to make investment decisions at the bank. In late 1996, the Illinois Department of Insurance seized Engle's Coronet Insurance Co. and started liquidation proceedings because regulators said Coronet was millions of dollars short of what it needed to pay policyholders' claims.

In the fourth quarter its real estate Texas ratio, which weighs bad loans and foreclosed real estate against core capital and loan-loss reserves, was 181. A score above 80 is considered cause for concern. The offices will reopen Saturday as branches of Republic Bank of Chicago Republic Bank of Chicago agreed to buy $162 million in assets. The last bank to fail in the state was Citizens National Bank of Macomb on May 22.