Regulators shut 6 Illinois banks - All part of Campbell Group; state leads U.S. in number of closings

Regulators shut 6 Illinois banks - All part of Campbell Group; state leads U.S. in number of closings
Copyright © 2009, Chicago Tribune
July 3, 2009
http://www.chicagotribune.com/business/chi-fri-failed-banks-0703-jul03,0,3186096.story


Six Illinois banks were shuttered Thursday, bringing the total number of closings of Illinois financial institutions to 12 this year -- the most of any state.

Regulators shut down Founders Bank of Worth and five other institutions controlled by the Campbell family, whose Campbell Group operates nine banks in Illinois.

The other Illinois banks are John Warner Bank of Clinton, First State Bank of Winchester, Rock River Bank of Oregon, Elizabeth State Bank of Elizabeth and First National Bank of Danville.

The PrivateBank and Trust Co. of Chicago agreed to assume all of the deposits of Founders Bank. Its 11 offices will reopen Monday as branches of The PrivateBank, which also agreed to buy $888.4 million of assets. As of April 30, Founders Bank had total assets of $962.5 million and total deposits of $848.9 million.

Founders Bank had gone on a search to try to raise about $50 million in capital after suffering securities losses in the first quarter and falling to an "undercapitalized" status.

The failure of the Campbell family's bank resulted primarily from losses on investments in risky instruments known as collateralized debt obligations and other loan losses, the FDIC said.

Deposits of John Warner Bank were acquired by Lincoln, Ill.-based State Bank of Lincoln. Three John Warner Bank branches will reopen Friday as branches of State Bank of Lincoln, the FDIC said. As of April 30, John Warner Bank had total assets of $70 million and total deposits of about $64 million. In addition to assuming all the deposits of the failed bank, State Bank of Lincoln agreed to buy about $63 million of assets. The FDIC will retain the remaining assets for later disposition.

The deposits of First State Bank of Winchester were acquired by First National Bank of Beardstown, Ill. Two offices will reopen Monday under the new bank name. First State Bank had total assets of $36 million and total deposits of about $34 million as of April 30. First National Bank also agreed to buy about $33 million of assets.

Rock River Bank's deposits and most of its assets were acquired by Harvard State Bank of Harvard. Four bank branches will reopen Monday as Harvard banks. At the end of April, Rock River Bank had $77 million in assets and $75.8 million in deposits.

Elizabeth State Bank's two offices will reopen Monday as branches of Galena State Bank and Trust in Galena, Ill. In addition to assuming deposits, Galena agreed to buy $52.3 million of the bank's assets. Elizabeth State had total assets of $55.5 million and total deposits of $50.4 million at the end of April.

The seven offices of First National Bank of Danville will reopen Monday as branches of First Financial Bank of Terre Haute, Ind., which assumed all of the bank's deposits. As of April 30, First National had total assets of $166 million and total deposits of $147 million.

Those Illinois banks, along with Dallas-based Millennium State Bank of Texas, which also was seized, bring the number of U.S. bank failures this year to 52.