June 4, 2010 – Arcola Homestead Savings Bank, Arcola, IL became the 80th banking failure of 2010 after the bank was closed by the Illinois Department of Financial Professional Regulation. Illinois has now had 12 banking failures this year, trailing only Florida with 13 banking failures.
The FDIC, appointed as receiver for the failed bank, could find no willing buyer for the bank. Accordingly, depositors will be paid off with checks from the FDIC that will be mailed on Monday. When the FDIC is unable to find a buyer for a failed bank, depositors with funds in excess of FDIC insurance limits face the potential loss of all funds in excess of insured deposit limits. Future recoveries of depositor losses will depend on the amount of proceeds from the final disposition of the bank’s assets. In the case of Arcola Homestead, the FDIC said that there did not appear to be any uninsured funds.
Another potential nightmare for depositors of Arcola Savings arises from the fact that customers will have no access to their funds until they receive FDIC payout checks which will be mailed on Monday. When a bank fails and is purchased by another institution, it is generally a nonevent for most customers. The biggest thing that customers of purchased failed banks will notice is that the name of their bank will change when it reopens on Monday. In the case of Arcola Homestead, the FDIC could find no buyer, and the banking operations of Arcola were terminated. The closing of Arcola was classified as a “payout” and depositors have no access to their funds until they receive their payout check from the FDIC.
Arcola Homestead was a very small bank with only $17 million in total assets and $18.1 million in total deposits. The FDIC estimates that the cost of closing Arcola Savings will amount to $3.2 million. Arcola is the 80th banking failure of 2010 and the 12th banking failure in Illinois this year.
Customers of Arcola Homestead Savings Bank who may have questions about the bank’s failure can contact the FDIC toll free at 1-800-238-8209.