The First State Bank of Winchester, Winchester, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with The First National Bank of Beardstown, Beardstown, Illinois, to assume all of the deposits of The First State Bank of Winchester.

The two offices of The First State Bank of Winchester will reopen on Monday as branches of The First National Bank of Beardstown. Depositors of The First State Bank of Winchester will automatically become depositors of The First National Bank of Beardstown. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until The First National Bank of Beardstown can fully integrate the deposit records of The First State Bank of Winchester.

Over the weekend, depositors of The First State Bank of Winchester can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of April 30, 2009, The First State Bank of Winchester had total assets of $36 million and total deposits of approximately $34 million. The First National Bank of Beardstown paid a premium of 2.0 percent to acquire all of the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, The First National Bank of Beardstown agreed to purchase approximately $33 million of assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and The First National Bank of Beardstown entered into a loss-share transaction on approximately $20 million of The First State Bank of Winchester’s assets. The First National Bank of Beardstown will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-331-6306. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Friday and Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/winchester.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $6 million. The First National Bank of Beardstown’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives. The First State Bank of Winchester is the 47th FDIC-insured institution to fail in the nation this year, and the eighth in Illinois. The last FDIC-insured institution to be closed in the state was The John Warner Bank, earlier today.

Source: FDIC