This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Bank Failures Exceed 2009's Pace

Stocks in this article: FNMFREFMER

WASHINGTON ( TheStreet) - State regulators closed four community banks Friday, bringing the total number of failed banks for 2010 to 72.

Year-to-date bank failures were more than double the pace for the same period in 2009, when there were 33 bank closures.

All four of the banks that failed on Friday had been previously assigned E-minus (Very Weak) financial strength ratings by TheStreet.com Ratings and all four were included in TheStreet's Bank Watch List, which included undercapitalized banks, based on a preliminary set of first quarter regulatory data.

Midwest Bank & Trust

The largest bank failure on Friday was Midwest Bank & Trust of Elmwood Park, Ill, which was the main subsidiary of Midwest Banc Holdings (MBHI). After state regulators took over the institution, the Federal Deposit Insurance Corporation was appointed receiver and sold Midwest to FirstMerit Bank, NA of Akron, Ohio, which is held by FirstMerit Corp (FMER).

While Midwest Bank & Trust faced mounting loan losses, the deterioration of the bank's capital first came to a head when the government-sponsored mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) were placed under government conservatorship in September 2008. On the holding company level, Midwest Banc Holdings reported total 2008 losses and impairment charges of nearly $82 million on the company's investments in preferred shares of Fannie and Freddie.

FirstMerit paid the FDIC a premium of 0.4% for Midwest Bank & Trust's $2.4 billion in deposits, and the FDIC agreed to share in losses on $2.3 billion of the assets First Merit acquired. Midwest's 23 offices were scheduled to reopen Saturday as FirstMerit branches.

> > Bull or Bear? Vote in Our Poll

The bank failure was expected to cost the FDIC's deposit insurance fund $216.4 million, although FirstMerit also granted the agency a "value appreciation instrument," which will probably lead to another payment from FirstMerit to the FDIC later on.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,380.41 +263.17 1.63%
S&P 500 1,886.76 +24.00 1.29%
NASDAQ 4,258.4380 +41.0480 0.97%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs