After regulators skipped a week, bank failure Friday is back. Friday afternoon the FDIC announced the closure of Bank of Lincolnwood in Lincolnwood, Illinois. It was the 37th failure of the year and the sixth in Illinois.
The Illinois bank is relatively small with total assets of approximately $214 million. Lincolnwood's collapse is only expected to cost the FDIC's insurance fund $83 million. The FDIC estimated the balance of its insurance fund at just over $13 billion as of March 31 but planned assessments should help to replenish it.
Regulators reached an agreement with Republic Bank of Chicago to assume the deposits of Bank of Lincolnwood. Republic agreed to purchase half of the failed bank's assets. The FDIC will dispose of the rest.
On April 13, the FDIC had entered into a cease and desist order with Lincolnwood. The FDIC demanded the bank stop a laundry list of "unsafe and unsound banking practices" included having a board that did not adequately supervise management, keeping insufficient capital, and engaging in "hazardous lending and lax collection practices." The FDIC and the bank apparently disagreed about how well the bank held up its end of the deal. Lincolnwood officials tried unsuccessfully to get a restraining order in Cook County Circuit Court to stop the bank's closure, according to the Chicago Tribune.
The Trib also reported that Lincolnwood's board included a former chairman "who previously was stripped of authority to lend, transfer funds and make investment decisions" by regulators.
