6 Campbell Family Banks Closed in Illinois

The Illinois Department of Financial and Professional Regulation closed 6 banks in Illinois yesterday all controlled by the Campbell family. All 6 failed not due to bad lending practices directly, but concentrated investments in CDOs.

The largest was Founders Bank in Worth. Founders Bank with 11 offices in Chicago's southwest suburbs had deposits of $848.9 million. The offices and accounts have been transferred to The Private Bank and Trust Company of Chicago. The estimated cost to the insurance fund is $188.5 million or 22 cents on the dollar.

Rock River Bank with four branches had deposits of $75.8 million. The offices and accounts will be taken over by Harvard State Bank with an estimated cost to the insurance fund of $27.6 million or 36 cents per dollar on deposit.

Elizabeth State Bank with just 2 offices will be taken over by Galena State Bank and Trust. Elizabeth State Bank had deposits of $55.5 million and the closing will cost the FDIC $11.2 million or 20 cents per dollar.

First State Bank of Winchester, also with 2 offices, has been taken over by The First National Bank of Beardstown. First State Bank of Winchester had deposits of $34 million and the closing will cost the FDIC insurance fund $6 million or 18 cents per dollar.

The John Warner Bank, with 3 offices in central Illinois has been taken over by the State Bank of Lincoln. John Warner Bank had deposits of $64 million and will cost the insurance fund $10 million or 17 cents per dollar on deposit.

First National Bank of Danville, with 7 offices will be taken over by First Financial Bank of Terre Haute, Indiana. First National had deposits of $147 million and will cost the insurance fund $24 million or 16 cents per dollar.

The Campbell family also controls 2 other community banks in Illinois and Legacy Bank in Scottsdale, Arizona.

Also on Thursday, Millennium State Bank of Texas in Dallas was shut down. The one office with $115 million in deposits will be reopened on Monday as the State Bank of Texas. The cost to the FDIC is estimated at $47 million or 41 cents per dollar on deposit.

The seven banks closed this week bring the total number for calendar year 2009 to 52.