Waukegan Savings Bank, Waukegan, IL, a small commercial bank, was closed today by state regulators and the FDIC was named as receiver. The FDIC sold the failed bank to First Midwest Bank, Itasca, IL, in order to protect depositors.
Waukegan Savings Bank was established in 1924 and had two branches. Both branches of the failed bank will reopen as branches of First Midwest and FDIC deposit insurance coverage will continue without interruption up to the applicable limits. Over the weekend, depositors of Waukegan can access their money by using ATM, checks or debit cards.
Regulators had Waukegan Savings Bank under scrutiny for several years. The Bank was issued a Consent Order on April 19, 2010 which detailed the “unsafe or unsound banking practices and violations of law or regulation alleged to have been committed by the Bank.” Waukegan had a toxic combination of a large amount of nonperforming loans and inadequate capital. Unable to raise additional capital from investors, regulators were forced to close Waukegan.
At March 31, 2012, Waukegan had total assets of $88.9 million and total deposits of $77.5 million. In addition to assuming all deposits, First Midwest agreed to purchase all of Waukegan’s assets.
First Midwest Bancorp, Inc. operates as the holding company for First Midwest Bank. Prior to today, First Midwest had acquired three other failed banks. During 2010, First Midwest acquired failed Palos Bank and Trust Company and Peotone Bank and Trust Company. In 2009, First Midwest purchased failed First DuPage Bank. First Midwest Bancorp is profitable and has almost $8 billion in assets.
Headquartered in Itasca, IL, First Midwest operates 100 banking offices in Illinois, Indiana and Iowa. Like many banks, First Midwest is struggling with slow loan demand and a weak economy. Earnings for the latest quarter ending June 30 came in at $6.3 million or $0.09 cents per share compared to $0.11 per share for the quarter ending June 30, 2011. Although the stock price of First Midwest has recovered from its lows, the price is far below the mid $30’s per share range that it reached in late 2007.
The loss to the FDIC Deposit Insurance Fund for the failure of Waukegan Savings Bank is $19.8 million. Waukegan becomes the 40th banking failure of the year and the sixth in Illinois.