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Regulators close down small bank in Illinois; makes 62 bank failures nationwide this year
WASHINGTON (AP) ' Regulators on Friday shut down a small bank in Illinois, lifting to 62 the number of U.S. bank failures this year.
The pace of closures has slowed, however, as the economy has stabilized and banks work their way through the bad debt accumulated in the Great Recession. By Aug. 6 last year, regulators had shuttered 109 banks.
The Federal Deposit Insurance Corp. seized Bank of Shorewood, in Shorewood, Ill., with $110.7 million in assets and $104 million in deposits.
Heartland Bank and Trust Co. in Bloomington, Ill., agreed to assume Bank of Shorewood's deposits and essentially all its assets.
The failure of Bank of Shorewood is expected to cost the deposit insurance fund $25.6 million.
The lender had three branches. It is the sixth bank in Illinois to fail this year.
The pace of bank failures has slowed this year as lenders work their way through piles of bad debt. A slow, but improving U.S. economy also has helped stem the number of bank casualties.
In all of 2010 regulators seized 157 banks, the most in a year since the savings-and-loan crisis two decades ago. The FDIC has said 2010 likely marked the peak for bank failures from the Great Recession.
There were 140 bank failures in 2009, costing the insurance fund about $36 billion. The failures last year cost around $21 billion, a lower price tag because the banks involved were smaller on average. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three were closed in 2007.
From 2008 through 2010, bank failures cost the fund $76.8 billion. The deposit insurance fund fell into the red in 2009. With failures slowing, the FDIC's deficit narrowed in the first quarter of this year; it stood at about $1 billion as of March 31.
Depositors' money ' insured up to $250,000 per account ' is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted last July.