ShoreBank of Chicago, Seven Others Shuttered as 2010 Failures Climb to 118
By Dakin Campbell and James Sterngold - Aug 21, 2010
ShoreBank Corp., the Chicago lender operating under a Federal Deposit Insurance Corp. cease-and- desist order for 13 months, and seven other banks were shut by regulators as 2010 bank failures climbed to 118.
ShoreBank’s 15 branches, including those in Chicago, Cleveland and Detroit, will open as Urban Partnership Bank, according to statements from the FDIC.
“The good news is that the bank, under this new management, will still be there and serving the South Side community,” said Dory Rand, referring to Urban Partnership’s William Farrow. Rand is president of the Chicago-based Woodstock Institute, a non-profit that studies community lending. “They have made the South Side a decent place to live and work and do business.”
Regulators also closed four banks in California, two in Florida and one in Virginia. All eight closures cost the FDIC’s deposit-insurance fund $473.5 million, the agency said yesterday. This year’s bank failures will surpass last year’s total of 140, FDIC Chairman Sheila Bair said last month in a Bloomberg Television interview.
The 15th bank failure in Illinois this year, ShoreBank was founded in 1973 and based on Chicago’s South Side. The lender raised more than $145 million from firms including Goldman Sachs Group Inc., General Electric Co., JPMorgan Chase & Co., and Citigroup Inc., and those funds will now be placed in the new bank, people familiar with the rescue efforts said. ShoreBank had $2.16 billion of assets on June 30.
Urban Partnership will continue ShoreBank’s mandate of helping low- and middle-income families and will become a community development financial institution, or CDFI, according to a statement. The head of the new entity, Farrow, is a former executive at the Chicago Board of Trade and Bank One Corp.
In other closings, the world’s largest agricultural lender, Rabobank Nederland NV, purchased two failed California institutions. Rabobank picked up 14 branches and paid the FDIC a 4.05 percent premium for Chico’s Butte Community Bank. Rabobank also bought Stockton’s Pacific State Bank, adding nine branches, the FDIC said.
The Office of the Comptroller of the Currency closed two banks based in central Florida, Community National Bank at Bartow and Independent National Bank of Ocala, according to the FDIC. The five combined branches were sold to Centerstate Banks Inc., based in Davenport, Florida.
Westamerica Bancorporation, the San Rafael, California- based lender with $4.7 billion assets, paid the FDIC a 2 percent premium for the three branches and $255.5 million in deposits of California’s Sonoma Valley Bank, the FDIC said.
Regulators also closed 14 branches of Los Padres Bank of Solvang, California. PacWest Bancorp, based in San Diego, paid a 0.45 percent premium for the $770.7 million in deposits. Nine banks have failed in California this year.
Imperial Savings and Loan Association of Martinsville, Virginia, a lender with one branch, was also seized.
The FDIC included 775 banks with $431 billion in assets on the confidential list of problem lenders as of March 31, an increase from 702 banks with $402.8 billion at the end of the fourth quarter.
To contact the reporters on this story: Dakin Campbell in San Francisco at firstname.lastname@example.org; James Sterngold in New York at email@example.com.