MercoPress. South Atlantic News Agency

US ends week with three regional banks seized by FDIC and new owners

United States banking regulators seized two banks in Illinois late Friday as the financial crisis claimed its 35th and 36th federally insured financial institutions of 2009. The Federal Deposit Insurance Corp. (FDIC) estimated the failure of Strategic Capital Bank and Citizens National Bank would cost 279 million US dollars.

Strategic and Citizens are the fourth and fifth Illinois banks to be closed by regulators so far this year. Strategic had total assets of 537 million and total deposits of 471 million as of May 13. Midland States Bank, based in Effingham, Ill., reached an agreement with the FDIC to assume all of the failed bank's deposits.

Midland also took over Strategic's one office, which will reopen next week under its new owner. As part of the agreement, Midland will buy 536 million of Strategic's assets and hold one million in remaining assets “for later disposition,” the agency said. FDIC and Midland also agreed to share losses on an asset pool totaling 420 million USD.

Citizens had total assets of 437 million and total deposits of 400 million as of May 13. Morton Community Bank of Morton, Ill., reached an agreement with the FDIC to assume all of the failed bank's deposits except for 200 million in brokered deposits. Morton will buy 240 million of Citizens' assets and share losses with the FDIC on another 200 million in assets.

The financial crisis keeps squeezing smaller banks across the US amid mortgage and other loan-related losses. The 36 failures in 2009 are 11 more than the 25 that collapsed in all of 2008. Dozens more are expected to collapse through 2010.

Friday's failure came a day after federal regulators seized Florida's BankUnited FSB in the year's biggest bank bust so far. The FDIC estimates BankUnited will cost its insurance fund 4.9 billion USD, making it the second-costliest bank failure of the current crisis after IndyMac Bank, which cost the FDIC about 11 billion USD.

BankUnited, the largest bank in Florida, had about 13 billion of assets and 8.6 billion of deposits. The bank has been hit hard by the sale of risky home loans but opened on Friday under its new management.

Private equity firms paid 900 million to rescue the BankUnited. The buying consortium includes WL Ross & Co, Carlyle Group, Blackstone Group and Centerbridge Partners. The FDIC and the new bank will share losses on about 10.7 billion in assets.

John Kanas, a banking industry veteran and former head of North Fork Bank, will manage the bank now. Despite the recession, there is still plenty of opportunity in the state of Florida, he said.

“Florida has a very good long-term outlook, not just because of its weather, but also because of its tax policies” he told Reuters.