Small bank closed in Illinois; 85 failures in 2011

[October 29, 2011]  WASHINGTON (AP) -- Regulators on Friday closed a small bank in Illinois, lifting to 85 the number of banks in the U.S. that have failed this year.

The number of closures has fallen sharply this year as banks have worked their way through the bad debt accumulated in the recession. By this time last year, regulators had shuttered 139 banks.

The Federal Deposit Insurance Corp. seized All American Bank of Des Plaines, Ill., with one branch, $37.8 million in assets and $33.4 million in deposits. International Bank of Chicago, based in Chicago, agreed to assume the assets and deposits of the failed bank.

The failure of All American Bank is expected to cost the deposit insurance fund $6.5 million.

Illinois has been one of the hardest-hit states for bank failures. Regulators closed 16 banks in the state last year. All American Bank is the ninth Illinois lender shut down this year.

California, Florida and Georgia also have seen large numbers of bank failures.

In all of 2010, regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. Those failures cost around $23 billion. The FDIC has said 2010 likely was the high-water mark for bank failures from the Great Recession.

In 2009, there were 140 bank failures that cost the insurance fund about $36 billion, a higher price tag than in 2010 because the banks involved were bigger on average. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three were closed in 2007.

From 2008 through 2010, bank failures cost the fund $76.8 billion. The FDIC expects failures from 2011 through 2015 to cost $19 billion.

The deposit insurance fund fell into the red in 2009. With failures slowing, the FDIC's fund balance turned positive in the second quarter of this year; it stood at $3.9 billion as of June 30.

[Associated Press]

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.