Highland Community Bank, IL, Second Bank Failure of 2015

HCBThe second bank failure of the year occurred in Illinois when state regulators closed Highland Community Bank, Chicago, IL.  During 2014 Illinois had five banking failures, the most of any state.

After closing Highland Community Bank, state regulators appointed the FDIC as  receiver.  To protect depositors the FDIC sold the failed bank to United Fidelity Bank, fsb, Evansville, Indiana, which will assume all deposits of Highland Community.

Highland Community Bank was a minority-owned bank that had operated in the Chicago area for over 40 years.  The Bank never recovered from the financial crash of 2008 and the number of troubled loans at the bank continually increased until regulators had no choice but to close the insolvent bank.

According to the Bank’s website “HCB’s focus is on the customers. We concentrate on building long-term relationships that meet our customers’ needs and are cost effective. We believe that our customers deserve more than a bank, they deserve a banker who is interested in their financial well-being. Our bankers and lenders know the local market and the local economy.”  Apparently Highland Community’s understanding of their customers and the local market wasn’t as good as they thought as defaulting borrowers ultimately brought the bank to insolvency.

Highland Community Bank had only two branches, both of which will reopen as branches of United Fidelity Bank.  All depositors of Highland will automatically become depositors of United Fidelity with uninterrupted FDIC deposit insurance coverage up to the applicable limits.  Over the weekend customers of the failed bank can continue to access their money through the use of ATMs, checking accounts and debit cards.

At December 31, 2014, Highland Community had total assets of $54.7 million and total deposits of $53.5 million.  In addition to assuming all of the failed bank’s deposits, United Fidelity also agreed to purchase all of its assets.  According to the FDIC, the most cost effective manner of resolving a failed bank is to sell its loan portfolio to the acquiring bank.

The cost to the FDIC Deposit Insurance Fund for Highland’s failure is $5.8 million.  Highland Community Bank becomes the nation’s second banking failure of 2015 and the first in Illinois.

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