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'sBank 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.