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article image94 Bank Failures in U.S. in 2009

By Chris Dade     Sep 20, 2009 in Business
The total number of bank failures in the U.S. during 2009 has risen to 94 after the Federal Deposit Insurance Corp. (FDIC) announced that it had closed down two subsidiaries of the Irwin Financial Corporation, which is based in Columbus, Indiana.
According to the Wall Street Journal the two banks in question had between them $3.2 billion in assets and 27 branches, control of which will now transfer to the First Financial Bank of Hamilton, Ohio. First Financial Bank has an agreement with the FDIC to share any losses incurred on $2.5 billion worth of the banks' assets.
Market Watch provides more details on the assets, and the deposits, that will also pass to First Financial's control, held by Irwin Union Bank and Trust Co. and Irwin Union Bank F.S.B. at August 31.
The former bank, like its parent based in Columbus, Indiana, held $2.7 billion in assets and $2.1 billion in deposits, whilst Irwin Union Bank F.S.B., based in Louisville, Kentucky, held $493 million in assets and $441 million in deposits. Market Watch confirmed that the parent company's shares had fallen to 22 cents each during Friday afternoon trading, a drop of more than 50%, adding that the impact on the parent of the subsidiaries' closures was still uncertain.
Both banks are said by the Wall Street Journal to have practiced "aggressive real-estate lending" and consequently to have suffered badly as the housing market declined sharply, turning bad many of the loans that had been made. Last Wednesday appears to have been the critical time for the banks as it was the day when their parent had to acknowledge that it could not comply with FDIC instructions to increase its levels of capital.
Neither Indiana or Kentucky had suffered a bank failure since the early 1990s. And the two failures they have now suffered between them will also have a considerable impact on the federal deposit insurance fund, says Market Watch, leaving it $850 million worse off.
On its website the Irwin Financial Corporation explains that it is "a bank holding company with a history tracing to 1871" offering "a broad range of banking services to small businesses and consumers in the Midwest and Southwest and to restaurant franchisees nationwide".
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