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Saturday, August 7, 2010

Chicago Bank Failure Makes 109 this Year

Bloomberg / Business Week

Ravenswood Bank, a Chicago-based lender with $265 million in assets, was shut by regulators as the number of U.S. failures this year reached 109.

Northbrook Bank & Trust Co. acquired Ravenswood’s $270 million in deposits and two branches, according to a statement posted today on the Federal Deposit Insurance Corp. website. The failure cost the FDIC’s deposit-insurance fund $68.1 million.

Regulators may close the most banks this year since 1992 as borrowers struggle to keep up with payments amid weak hiring and bad residential and commercial loans impair capital levels. Failures in 2010 will surpass last year’s total of 140, FDIC Chairman Sheila Bair said last month in a Bloomberg Television interview.

“If the economy remains weak and we don’t see material workouts of these problematic commercial loans, we would expect to see a material number of failures spilling into 2011,” Frederic Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon, said today in a phone interview.

Ravenswood is the 13th Illinois lender shut this year, the statement said. 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.