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Bank Failure Friday Comes Early

Facing a holiday weekend, the FDIC got a jump on its usual Friday bank closures, by shuttering a record seven banks on Thursday. It was the most in a single day since the onset of the financial crisis. The closures bring the number of total bank failures for the year to 52 and will cost the FDIC's insurance fund $314.3 million.

Six of the seven failures were in Illinois. In one fell swoop the closings vaulted Illinois ahead of Georgia for bank closing leader so far this year. As it stands now: Land of Lincoln 12, Peach State 9.

One family, who operate as the Campbell Group, controlled all six of the failed Illinois banks. The FDIC placed the blame for the failures on the Campbell Group's investments in collateralized debt obligations and other loan losses.

At $188.5 million, the costliest hit to the FDIC's deposit fund was from Founders Bank in Chicago. As of April 30, 2009, Founders Bank had total assets of $962.5 million. The PrivateBank and Trust company of Chicago agreed to purchase approximately $888.4 million of its assets.

The other Illinois banks to close were the First National Bank of Danville picked up by First Financial Bank of Terre Haute, Indiana; Elizabeth State Bank picked up by Galena State Bank and Trust of Galena, Illinois; Rock River Bank picked up by Harvard State Bank of Harvard, Illinois; First State Bank of Winchester picked up by Illinois' First National Bank of Beardstown; and John Warner Bank picked up by Illinois' State Bank of Lincoln. Combined they hit the FDIC's deposit fund for only $78.8 million.

Ironically, on Thursday President Obama also declared a major disaster exists in Illinois from severe storms, flooding, and tornadoes that hit the state during May 8-9.

The only non-Illinois bank to fail was Millennium State Bank of Dallas, Texas. The FDIC entered into a purchase and assumption with State Bank of Texas in Irving to take on the failed institution's deposits. The agency estimates that the failure will cost the insurance fund $47 million.

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