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Though smaller companies may still bid on individual failed banks, they may have to enlarge their bids — perhaps significantly — to compete with package buyers.
April 22
WASHINGTON — Regulators closed Chicago-area Amcore Bank late Friday, putting the $3.8 billion-asset institution out of its misery on a night when six other institutions in and around the Windy City also failed.
The agency quickly sold the nationally-chartered institution, based in Rockford, to $44 billion-asset Harris National Association in Chicago. The failure was projected to cost the Federal Deposit Insurance Corp. an estimated $220 million.
The seven failed banks — totaling $6.3 billion in assets and costing the government nearly $1 billion — brought the year's failure total for the industry to 57. After 21 failures in Illinois last year, 10 banks have already been closed in the state in 2010.
In addition to Amcore, the government seized $1.2 billion-asset Broadway Bank, $486 million-asset New Century Bank, $473 million-asset Wheatland Bank, $200 million-asset Lincoln Park Savings Bank, $130 million-asset Peotone Bank and Trust Co., and $77 million-asset Citizens Bank & Trust Co.
Amcore's failure came following a string of losses tied to construction and development loans for the national bank. Between 2008 and 2009, it lost $321 million, and at the end of last year it had become undercapitalized with over 10% of its portfolio in nonperforming assets. Last month, an auditor said there was "substantial doubt about the company's ability to continue as a going concern."
Harris will reopen Amcore's 58 branches on Saturday. The acquirer agreed to assume all of Amcore's $3.4 billion in deposits and acquire virtually all of its assets. As part of its acquisition, the buyer will share losses with the FDIC on $2 billion of those assets.
But the FDIC's activity in the region was not limited to Amcore, as many observers predicted the agency was shopping a slew of institutions in the battered region as part of packaged bids.
In the end, two acquirers each picked up multiple institutions. MB Financial Bank, which has been a regular participant in FDIC auctions, purchased both Broadway and New Century. Meanwhile, subsidiaries of Wintrust Financial Corp. in Lake Forest Ill. bought Wheatland and Lincoln Park Savings.
Broadway, owned by a family tied to the upcoming Senate race in the state, was estimated to cost the FDIC $394 million. MB Financial agreed to assume all $1.1 billion of its deposits, and acquire virtually all of its assets. The FDIC and the buyer will share losses on about $878 million of those assets.
The bank's failure was expected for some time, and the institution became intertwined in Illinois politics after Alexi Giannoulias, whose family owned it, entered the race for the U.S. Senate as a Democrat.
MB Financial also agreed to assume all of New Century's $492 million in deposits and take over roughly all of its assets. The buyer will share losses with the FDIC on $429 million of those assets. The failure was estimated to cost the FDIC $125 million.
All of Wheatland's $438 million in deposits were sold to Wheaton Bank & Trust, owned by Wintrust, along with roughly all of its assets. The FDIC and the buyer will share losses on $300 million of those assets. The failure was estimated to cost $133 million.
Another Wintrust subsidiary, Northbrook Bank and Trust Co., agreed to assume all of Lincoln Park Savings' $171 million in deposits, and acquire virtually all of its assets. The buyer and the FDIC will share losses on $141 million of those assets. The failure was estimated to cost the FDIC $48 million.
The linked pickups came as several observers predict the FDIC will do more bundling of institutions into packaged deals, just one of several tactics employed by the agency to increase returns for the Deposit Insurance Fund. The takeovers came just one week after TD Bank — a unit of Toronto-Dominion Bank in Canada — won the rights to three failed Florida banks in a linked transaction.
Peotone's $127 million of deposits went to First Midwest Bank in Itasca, Ill., and the acquirer paid a 1% premium. First Midwest also purchased essentially all of the failed bank's assets and will share losses with the FDIC on $57 million of those assets. The failure was estimated to cost $32 million.
The FDIC said Citizens Bank & Trust's failure was estimated to cost $21 million. Republic Bank of Chicago, in Oak Brook, agreed to assume all of its deposits, but the FDIC will keep most of the failed bank's assets in receivership.
