MB Financial takes over Benchmark Bank after feds shut them down
Regulators on Friday shut down Benchmark Bank, based in Aurora, the 20th to fail in Illinois this year. Benchmark branches are in Aurora, St. Charles, Ransom, Verona and Seneca.
The feds also closed five others, including Ohio's AmTrust Bank, the fourth-largest bank to fail this year. That brings to 130 the number of U.S. banks to be brought down so far in 2009 by recession and mountains of bad debt.
MB Financial Inc. has acquired some deposits and loans of Benchmark in a transaction facilitated by the FDIC. Benchmark locations will reopen today and operate as branches of MB Financial Bank. Customers can continue to bank as usual, MB said in a release.
Based on financial data as of Sept. 30, MB has assumed approximately $179 million of Benchmark Bank deposits, approximately $4 million of brokered deposits were not assumed. Benchmark had listed $170 million in assets and $181 million in deposits.
The failure of Benchmark Bank is expected to cost the Federal Deposit Insurance Corp. an estimated about $64 million.
Customers can call the FDIC toll-free at (800) 356-1848 from 9 a.m. to 6 p.m. today, noon to 6 p.m. Sunday and 8 a.m. to 8 p.m. thereafter, or visit the FDIC's Web site at www.fdic.gov/bank/individual/failed/benchmark-il.html.
Also seized by the FDIC were three Georgia banks: Buckhead Community Bank, based in Atlanta, with $874 million in assets and $838 million in deposits; First Security National Bank, based in Norcross, Ga., with $128 million in assets and $123 million in deposits; and Tattnall Bank, of Reidsville, Ga., with assets of $49.6 million and deposits of $47.3 million.
As the economy has soured, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have accelerated and sapped billions out of the federal deposit insurance fund. It has fallen into the red.
The FDIC expects the cost of bank failures to grow to about $100 billion over the next four years.
Depositors' money -- insured up to $250,000 per account -- is not at risk, with the FDIC backed by the government. The FDIC still has about $21 billion cash in loss reserves apart from the insurance fund. It can also tap a Treasury Department credit line of up to $500 billion.
Banks have been especially hurt by failed real estate loans. Banks that had lent to seemingly solid businesses are suffering losses as buildings sit vacant. As development projects collapse, builders are defaulting on their loans.
If the economic recovery falters, defaults on the high-risk loans could spike. Many regional banks hold large concentrations of these loans. Nearly $500 billion in commercial real estate loans are expected to come due annually over the next few years.
The 130 bank failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the federal deposit insurance fund more than $28 billion so far this year. They compare with 25 last year and three in 2007.