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Four Banks Fail, Depositors Suffer

WASHINGTON ( TheStreet) -- Regulators shuttered four U.S. banks on Friday, bringing the nation's tally of bank and thrift failures to 26.

The Federal Deposit Insurance Corp. was unable to find buyers for two of the failed institutions, leading to losses for depositors who had balances exceeding the agency's insurance limits. Ratings had previously assigned E-minus (Very Weak) financial strength ratings to all four banks, and all were included in's list of undercapitalized banks.

Sun American Bank

The Florida Office of Financial Regulation shut down Sun American Bank of Boca Raton, Fla. and appointed the FDIC receiver. The failed bank was the main subsidiary of Sun American Bancorp (SAMB) and had roughly $444 million in deposits and $536 million in assets, all of which were acquired by First-Citizens Bank & Trust of Raleigh, N.C., with the FDIC agreeing to share in losses on $433 million of the acquired assets.

First-Citizens is held by First Citizens BancShares (FCNCA - Get Report). This is the fourth recent acquisition of a failed bank by First-Citizens. The previous was First Regional Bank of Los Angeles., Calif., which failed on Jan. 29.

Sun American's 12 branches were set to reopen Monday as branches of First-Citizens. The FDIC estimated the cost to its insurance fund would be $103.8 million.

Bank of Illinois

Elsewhere, state regulators closed Bank of Illinois of Normal, Ill. The FDIC was appointed receiver and sold the failed bank's $199 million in total deposits for a significant premium of 3.61% to Heartland Bank & Trust of Bloomington, Ill.

Heartland Bank & Trust also agreed to assume the failed bank's $212 million in total assets, with the FDIC agreeing to share in losses on $167 million.

The two offices of Bank of Illinois were scheduled to reopen Saturday as Heartland Bank & Trust branches. The FDIC estimated the cost to its insurance fund would be $53.7 million.

Waterfield Bank

The Office of Thrift Supervision took over Waterfield Bank of Germantown Md., and appoint the FDIC receiver. Since the FDIC was unable to find a buyer for the failed thrift's $156 million in deposits and $156 million in assets, the agency created Waterfield Bank, FA a new thrift, which would operate until April 5 with the sole purpose of allowing customers to move their insured checking, money market and savings account balances to other institutions.
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