Founders Bank in Worth IL and 6 Others Closed by FDIC
Seven banks were seized by the FDIC yesterday including Founders Bank in Worth, IL, John Warner Bank in Clinton, IL, First State Bank of Winchester in Winchester, IL, Rock River Bank in Oregon, IL, The Elizabeth State Bank in Elizabeth, IL, First National Bank of Danville in Danville IL, and Millennium State Bank of Texas in Dallas, Texas.
It’s not random chance that 6 banks failed in Illinois yesterday. The 6 banks were part of a larger family of banks and exposed themselves to too many bad loans. Three of of the banks were part of Peotone Bancorp, Inc. Peotone Bank and Trust Company is the one bank from the group that survived.
Luckily, the FDIC found banks to take up the deposits of each of these banks, even funds that weren’t FDIC insured. So nobody lost any money in these closures, even those who were over the FDIC limits.
Those who had CDs at the failed banks may be losing their CD rates however. State Bank of Lincoln has said that they will honor the rates on CDs from John Warner Bank. If CD rates do change depositors have the right to withdraw their funds without incurring an early withdrawal penalty.
Founders Bank and Rock River Bank had been offering a reward checking account with a 4.19% APY on balances up to $50,000. It’s doubtful the new owners will continue with these rates, but it’s up to them. If anybody knows how the new banks are treating the old reward checking rates or CD rates please leave a comment.
It’s also interesting to note that each of these failed banks had a 1 or 2 star rating from bankrates bank soundness measure.