Weekend Economists Enumerate the Wealth of Nations, February 10-12, 2012

[Demeter]

10. 2 BANKS DOWN THIS WEEKEND--TOTAL LOSS: $51.3m

Charter National Bank and Trust, Hoffman Estates, Illinois, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Barrington Bank & Trust Company, National Association, Barrington, Illinois, to assume all of the deposits of Charter National Bank and Trust.

The two branches of Charter National Bank and Trust will reopen on Saturday as Hoffman Estates Community Bank, a branch of Barrington Bank & Trust Company, National Association...As of December 31, 2011, Charter National Bank and Trust had approximately $93.9 million in total assets and $89.5 million in total deposits. In addition to assuming all of the deposits of the failed bank, Barrington Bank & Trust Company, National Association agreed to purchase essentially all of the assets.

The FDIC and Barrington Bank & Trust Company, National Association entered into a loss-share transaction on $72.1 million of Charter National Bank and Trust's assets. Barrington Bank & Trust Company, National Association will share in the losses on the asset pools covered under the loss-share agreement....As part of this transaction, the FDIC will acquire a value appreciation instrument. This instrument serves as additional consideration for the transaction.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $17.4 million. Compared to other alternatives, Barrington Bank & Trust Company, National Association's acquisition was the least costly resolution for the FDIC's DIF. Charter National Bank and Trust is the eighth FDIC-insured institution to fail in the nation this year, and the first in Illinois. The last FDIC-insured institution closed in the state was All American Bank, Des Plaines, on October 28, 2011.

SCB Bank, Shelbyville, Indiana, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First Merchants Bank, National Association, Muncie, Indiana, to assume all of the deposits of SCB Bank.

The four branches of SCB Bank will reopen on Saturday as branches of First Merchants Bank, National Association...As of December 31, 2011, SCB Bank had approximately $182.6 million in total assets and $171.6 million in total deposits. In addition to assuming all of the deposits of the failed bank, First Merchants Bank National Association agreed to purchase essentially all of the assets...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $33.9 million. Compared to other alternatives, First Merchants Bank, National Association's acquisition was the least costly resolution for the FDIC's DIF. SCB Bank is the ninth FDIC-insured institution to fail in the nation this year, and the first in Indiana. The last FDIC-insured institution closed in the state was Integra Bank, National Association, Evansville, on July 29, 2011.