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Galena State Bank and Trust, Galena, Illinois, Assumes All of the Deposits of the Elizabeth State Bank, Elizabeth, Illinois
The Elizabeth State Bank, Elizabeth, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Galena State Bank and Trust, Galena, Illinois, to assume all of the deposits of The Elizabeth State Bank.
The two offices of The Elizabeth State Bank will reopen on Monday as branches of Galena State Bank and Trust. Depositors of The Elizabeth State Bank will automatically become depositors of Galena State Bank and Trust. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until Galena State Bank and Trust can fully integrate the deposit records of The Elizabeth State Bank.
Over the weekend, depositors of The Elizabeth State Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.
As of April 30, 3009, The Elizabeth State Bank had total assets of $55.5 million and total deposits of approximately $50.4 million. Galena State Bank and Trust paid a premium of 1.0 percent to acquire all of the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, Galena State Bank and Trust agreed to purchase approximately $52.3 million of assets. The FDIC will retain the remaining assets for later disposition.
The FDIC and Galena State Bank and Trust entered into a loss-share transaction on approximately $44.5 million of The Elizabeth State Bank's assets. Galena State Bank and Trust will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.
Customers who have questions about today's transaction can call the FDIC toll-free at 1-800-591-2820. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Friday and Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties can also visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/elizabeth.html.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $11.2 million. Galena State Bank and Trust's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. The Elizabeth State Bank is the 49th FDIC-insured institution to fail in the nation this year, and the tenth in Illinois. The last FDIC-insured institution to be closed in the state was Rock River Bank, Oregon, earlier today.
The six failed Illinois banks are all controlled by one family and followed a similar business model that created concentrated exposure in each institution. The failure of these banks resulted primarily from losses related to the banks' investment in collateralized debt obligations and other loan losses.
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Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,246 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-116-2009
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