institutions insured by the Federal Deposit Insurance Corp. (FDIC), including six in Illinois and one in Texas, were closed last week. To date, 52 FDIC-insured banks have failed this year. The Illinois Department of Financial and Professional Regulation closed Worth-based Founders Bank, Winchester-based First State Bank of Winchester, Oregon-based Rock River Bank, Clinton-based John Warner Bank and Elizabeth-based Elizabeth State Bank, and the Office of the Comptroller of the Currency closed Danville-based First National Bank of Danville. In the Lone Star State, the Texas Department of Banking shuttered Millennium State Bank of Texas, which was headquartered in Dallas. The FDIC estimates the cumulative damage of the closings to its Deposit Insurance Fund is $314.3 million, of which $188.5 stems from the Founders Bank failure. The PrivateBank and Trust Co., based in Chicago, entered into a purchase and assumption agreement with the FDIC to assume all of Founders Bank's deposits. PrivateBank and Trust paid a 1.5% premium to acquire the deposits and agreed to buy about $888.4 million of assets. The FDIC and PrivateBank and Trust entered into a loss-share transaction on approximately $617 million of the assets. Purchase and assumption agreements were signed in relation to the six other closings, as well: [list] The First National Bank of Beardstown, Beardstown, Ill., will assume First State Bank of Winchester's deposits (2% premium) and purchase $33 million of assets (loss-share agreement on $20 million); *Harvard State Bank, Harvard, Ill., will assume Rock River Bank's deposits (2% premium) and buy $72.9 million of assets (loss-share agreement on $51.3 million); *State Bank of Lincoln, Lincoln, Ill., will assume John Warner Bank's deposits ($4.1% premium) and buy $63 million of assets (loss-share agreement on $31 million); *Galena State Bank and Trust, Galena, Ill., will assume Elizabeth State Bank's deposits (1% premium) and purchase $52.3 million of assets (loss-share agreement on $44.5 million); *First Financial bank NA, Terre Haute, Ind., will assume First National bank of Danville's deposits 95.36% premium) and purchase approximately $148 million of assets (loss-share agreement on $97 million); and *State Bank of Texas, Irving, Texas, will assume Millennium State Bank's deposits and purchase all of its assets, which totaled approximately $118 million at the end of June.[/list] The FDIC will retain the remaining assets for later disposition. In a separate announcement, Lynwood, Wash.-based City Bank says it has signed a cease and desist order with the FDIC, which focuses on the steps that the FDIC and the state's Department of Financial Institutions (DFI) have identified as necessary to correct deficiencies in the bank's most recent regulatory examination. "The agreement does not reflect any new developments impacting our business," said the bank's president and CEO, Conrad Hanson, in a statement. "We recognize that these changes are necessary, and we have made significant progress on these issues throughout 2009." Among other things, the agreement addresses many organizational and operational issues, including the key elements of City Bank's efforts to deal with a high level of nonperforming residential construction loans. The agreement calls for a plan for the orderly reduction of nonperforming loans and foreclosed real estate. Through June 30, City Bank and home builders have sold or have pending sales of 775 homes, or $233 million from the bank's portfolio of loans and foreclosed real estate. "On the sales where we have had short sales, we have realized an average loss of principal of about 15 percent," Hanson said. The agreement also requires the bank to reduce the level of brokered deposits, which has occurred as these certificates of deposits mature. City Bank says its strategy of selling homes to generate cash for repayment of brokered deposits as they mature will reduce the overall size of the bank. SOURCES: FDIC, Ci