First Chicago Bank & Trust, the Chicago, Illinois institution is quickly searching for a buyer, in hopes of seeing their 22 year run come to an end.
As signs point to a slow economic recovery, many banks are still looking for ways to avoid the dreaded Friday failures. This week the FDIC, admitted that they would likely soon begin looking for a healthy buyer for the Chicago-based bank unless $50 million in capital can be raised.
The death of First Chicago Bank & Trust has been a slow one. By the end of 2010, the bank saw most of its capital shrink and first-quarter financial results showed that the bank lost another $10.1 million.
One of the biggest reason First Chicago is in so much trouble, is due to the level of capital filed under loans. Most Chicago News properties point to commercial real estate, not business loans, as the cause of many Chicago bank failures.
In reviewing First Chicago’s books, we found that of their $959.3 million in assets, $751 million are in loans, divided across; $35 million in foreclosed real estate, $12 million in family properties and another $10 million in construction and land loans.
First Chicago and its key shareholder, California private equity firm Castle Creek have set early June as the end date to raise the much-needed capital. The bank has been actively talking to groups who have the capital to keep the bank running, but no one has committed.
For members of the bank, it is important to remember that you are protected up to the standard FDIC insurance amount of $250,000 per depositor.
Historically, the state of Illinois has avoided the massive bank failures other states have experienced. To date 41 Illinois banks have failed since 2009, with 4 occurring in this year.