First Midwest takes over assets of failed Waukegan bank

Itasca-based First Midwest Bank has taken over the assets of a Waukegan-based bank that was closed by federal regulators last week.

First Midwest Bank agreed to assume essentially all asset of Waukegan Savings Bank after the Federal Deposit Insurance Corp. seized the institution on Friday evening. Waukegan Savings had about $88.9 million in assets and $77.5 million in deposits as of March 31.

The two branches of Waukegan Savings Bank reopened as branches of First Midwest Bank, according to First Midwest. Depositors of Waukegan Savings Bank will automatically become depositors of First Midwest Bank and deposits will continue to be insured by the FDIC.

Customers of Waukegan Savings Bank should continue to use their existing branch until they receive notice from First Midwest Bank that it has completed systems changes to allow other First Midwest Bank branches to process their accounts as well, the company said.

The failure of Waukegan Savings is expected to cost the deposit insurance fund $19.8 million.

The bank is the sixth FDIC-insured institution in Illinois to fail this year., and the 40th bank to be closed nationally.

U.S. bank closures are running at a slower pace than in 2011; 61 banks had failed by this time last year.

Bank closures have slowed sharply since peaking in 2010 in the wake of the financial crisis. In 2007, just three banks went under. That number jumped to 25 in 2008, after the meltdown, and ballooned to 140 in 2009.

In 2010 regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. The FDIC has said 2010 likely was the high-water mark for bank failures from the Great Recession.

From 2008 through 2011, bank failures cost the fund an estimated $88 billion. The deposit insurance fund fell into the red in 2009. But with failures slowing, the fund's balance turned positive in the second quarter of last year. By Dec. 31, it stood at $11.8 billion, according to the FDIC.

The FDIC expects failures from 2012 through 2016 to cost $12 billion.