Failure of bank in Illinois brings '12 total to 40

Associated Press

WASHINGTON (AP) — Regulators have closed a small bank in Illinois, bringing to 40 the number of U.S. bank failures this year.

The Federal Deposit Insurance Corp. on Friday seized Waukegan Savings Bank, based in Waukegan, Ill.

The bank had about $88.9 million in assets and $77.5 million in deposits as of March 31.

First Midwest Bank, based in Itasca, Ill., agreed to assume all of Waukegan Savings' deposits and purchase essentially all of the failed bank's assets.

The failure of Waukegan Savings is expected to cost the deposit insurance fund $19.8 million.

The bank, which had two branches, is the sixth FDIC-insured institution in Illinois to fail this year.

U.S. bank closures are running at a slower pace than in 2011; 61 banks had failed by this time last year.

Bank closures have slowed sharply since peaking in 2010 in the wake of the financial crisis. In 2007, just three banks went under. That number jumped to 25 in 2008, after the meltdown, and ballooned to 140 in 2009.

In 2010 regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. The FDIC has said 2010 likely was the high-water mark for bank failures from the Great Recession.

From 2008 through 2011, bank failures cost the fund an estimated $88 billion. The deposit insurance fund fell into the red in 2009. But with failures slowing, the fund's balance turned positive in the second quarter of last year. By Dec. 31, it stood at $11.8 billion, according to the FDIC.

The FDIC expects failures from 2012 through 2016 to cost $12 billion.

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