US regulators close seven banks – six in Illinois, one in Texas

US regulators close seven banks – six in Illinois, one in Texas

The Thursday closing of seven US banks by the federal regulators brings the total number of banks closed thus far this year to a whopping 52 – which is more than two times the figure of 25 bank closures in 2008, and strikingly more than the 3 banks closures in 2007!

The seven banks that have been shut down include six in Illinois – namely, the Founders Bank of Worth; the John Warner Bank of Clinton; the First State Bank of Winchester in Winchester; the Elizabeth State Bank of Elizabeth; the Rock River Bank of Oregon; the First National Bank of Danville in Danville - and one in Texas, namely, the Millennium State Bank of Texas, based in Dallas.

According to the Federal Deposit Insurance Corp (FDIC), the six Illinois banks were all under the control of one family, and had the same business model. Their failure came about from their losses, which included some bad investments in collateralized debt obligations and other loan losses.

While Millennium State Bank was the first Texas bank to be closed this year; the biggest of the seven seized banks was the Founders Bank of Worth, Illinois. As per the FDIC, the bank had assets to the tune of $962.5 million, and nearly $848.9 million in deposits, which will be assumed by the PrivateBank and Trust Co of Chicago.