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FDIC closes Chicago bank, pays insured deposits

FDIC closes Chicago bank, pays insured deposits

March 10th, 2012 in News

WASHINGTON (AP) - Regulators have closed a small bank in Chicago, the 13th U.S. bank to fail this year.

By this time last year, 23 had been shuttered.

The Federal Deposit Insurance Corp. on Friday closed New City Bank, which had $71.2 million in assets and $72.4 million in deposits as of Dec. 31.

The FDIC did not find another lender to take over the bank's operations, so it will mail out checks to depositors in the amount of their insured funds.

The agency said it needs to obtain information from New City Bank customers to determine the number of uninsured deposits at the bank. The FDIC insures up to $250,000 per depositor.

The bank failure is expected to cost the deposit insurance fund $17.4 million.

New City Bank is the second FDIC-insured bank in Illinois to fail this year.

In all of 2010, regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. Those failures cost the fund around $23 billion. The FDIC has said 2010 likely was the high-water mark for bank failures from the Great Recession. Last year, 92 banks failed costing an estimated $7.9 billion.

In 2009, there were 140 bank failures that cost the insurance fund about $36 billion, a larger sum than in 2010 because the banks involved were bigger 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 an estimated $79 billion. The FDIC expects failures from 2011 through 2015 to cost $19 billion.

The deposit insurance fund fell into the red in 2009. With failures slowing, the FDIC's fund balance turned positive in the second quarter of last year.

By Dec. 31, it stood at $9.2 billion, nearly 18 percent higher than three months earlier, according to the FDIC.