New York, September 5 -- The worst economic slump since the Great Depression has led to the closure of five more banks in the U.S, taking the count of bank failures to 89 this year alone.
The Federal Deposit Insurance Company (FDIC) seized five small regional banks on Friday evening. The latest banks to go belly up include two institutions in Illinois, and one each in Arizona, Iowa and Missouri.
Platinum Community Bank, in Rolling Meadows, and InBank, in Oak Forest, were the latest financial establishments to be seized by the FDIC in Illinois.
These two failures take the total of bank failures to 15 in Illinois alone this year. Prior to this, Mutual Bank in Harvey had to down shutters on July 31, 2009.
No buyer for Platinum Community
The Office of Thrift Supervision is still scouting for a buyer to take over the $345.6 million worth of assets of Platinum Community Bank.
David Barr, spokesman for the FDIC, said of the present scenario, "The bank is gone. It no longer exists. We couldn't find an appropriate buyer. We don't do that very often."
The situation warrants that the FDIC begins to pay the insured deposit amounts to customers. As per the current provisions, the FDIC covers each customer account up to $250,000.
Meanwhile, MB Financial Bank of Chicago will handle the transactions pertaining to federal government direct deposits such as Social Security and Veterans' payments.
Meanwhile, MB Financial took over the $212 million in assets and $199 million in deposits of InBank. The three branches of InBank will now open as branches of MB Financial. For the customers it will be business as normal and they can continue to use their debit cards and write checks.
The other failures
Vantus Bank of Sioux City, Iowa; First Bank of Kansas City, Missouri; and First State Bank of Flagstaff, Arizona were also shut by the FDIC due to the financial distress.
Tustin, California-based Sunwest Bank took over the assets and deposits of First State Bank of Flagstaff. Thus all customers of the latter become clients of Sunwest. The failure of First State Bank represents the third failure in Arizona this year.
Meanwhile Vantus Bank became Iowa's first bank to fail in 2009. The Great Southern Bank of Springfield is taking over the $368 million in deposits of Vantus. Great Southern will also take care of Vantus' $458 million in assets, at least till it finds a suitable buyer for them.
The First Bank of Kansas City, which was also seized by the federal regulator on Friday, became Missouri's second failure of 2009. The Great American Bank has bought the bank’s assets worth $16 million and assumed the deposits as well, which are worth $15 million.