Illinois Leads Nation in Bank Failures for 2009
State has had 12 bank failures so far; More likely
Tuesday, Jul 7, 2009 | Updated 2:30 PM CST
Illinois has seen 12 local banks fail in 2009. The next highest is Georgia with nine failures and then California with six.
Illinois leads the nation in bank failures so far this year, and a banking group warns that more failures are likely.
But experts say the state's top ranking is largely because Illinois has more banks than any other state.
Illinois has seen 12 local banks fail in 2009. The next highest is Georgia with nine failures and then California with six.
Half the Illinois failures came last week with the shutdown of six banks owned by a single company, the Campbell Group. As with the failure of AIG and other national institutions, these local banks were brought down by investments that went bad, leaving them without the money to operate.
"They are a family-owned company. Six of their eight banks made some bad investments, while the other two made community loans and they are doing fine," said Sue Hofer, spokeswoman for the Illinois Department of Finance and Professional Regulation.
All six have reopened with new owners, and federal insurance protected people who had money at the banks.
The Federal Deposit Insurance Corp. this week estimated that the failure of the banks -- based in Winchester, Clinton, Danville, Worth, Oregon and Elizabeth -- would cost the deposit-insurance fund $267 million.
Illinois Bankers Association president and CEO Linda Koch said more failures are likely, including in Illinois.
She said Illinois has 650 banks, twice as many as in the No. 2 state, Georgia. That's because Illinois was among the last to allowed unrestricted branch banking in the early 1990s, she said.
Koch pointed out that the 52 bank failures nationwide are only a fraction of the 745 failures during the savings-and-loan crisis in the 1980s and early '90s.
"To people in the industry, it's remarkable that there are just a little over 50 banks that have failed," said Koch.
Copyright Associated Press
Posted Tuesday, Jul 7, 2009 - 2:23 PM CST
