FDIC takes over First Banking Center
Michigan bank now owns branches
November 23, 2010 | 08:58 AM
As Walworth County Sheriff's deputies stood by at the entrances to the Lake Geneva branch of First Banking Center, Federal Deposit Insurance Corporation officials spent much of the weekend preparing for what appears to now be a smooth transition.
On Saturday, First Michigan Bank acquired the troubled First Banking Center which is headquartered in Burlington, with 17 total branches, including several in the Geneva Lake area. That announcement came on the heels of the Wisconsin Department of Financial Institutions closing the bank on Friday. To protect the depositors, the FDIC entered into a purchase agreement with First Michigan to assure all deposits of First Banking Center.
As of Saturday, it was business as usual at the bank on Broad Street in Lake Geneva. First Banking Center now officially is a division of the First Michigan Bank, which will operate all of its branches. Throughout the transition, the bank was open during regular business hours and customers could access their accounts and funds. It also appears as though bank tellers and loan officers at the banks will retain their positions. According to information on the First Banking Center website, bank employees, customers or public were not made aware in advance of the FDIC takeover as is typical.
First Banking Center has been in financial trouble for quite some time. The bank had been in the process of raising capital from private investors to improve its financial position following its losses during the rough economic times.
As of Sept. 30, First Banking Center had about $750.7 million in total assets and $664.8 million in total deposits. The FDIC and First Michigan entered into a loss-share transaction on $515.6 million of the assets. First Michigan Bank will share the losses on the asset pools, but will keep them in the private sector and is expected to minimize disruption for loan customers.
It is the 149th FDIC-insured institution to fail in the country this year and the second in Wisconsin. The most recent institution to close was Maritime Savings Bank, West Allis, on Sept. 17.
"Our top priority is to assure all customers that their deposits are safe and remain readily available to them," president and CEO of First Michigan Bancorp stated in a press release. "We are excited to bring First Banking Center's customers and employees into our banking family. Our mission as a community bank is to continue to provide our customers and communities with localized, high personalized service and enhanced products so that they in turn, can achieve their financial goals."
Gary S. Collins has been named the president of the Wisconsin region, while Hugh McLean is the executive managing director. They will be responsible for the daily operations of the branches.
"We believe that the Southern Wisconsin markets served by First Banking Center will benefit from a healthy, well-capitalized and invigorated community bank," Collins stated in a press release. "We look forward to not only continuing but expanding relationships with the individuals and business that First Banking Center has served for many years."
Collins stated it will be "business as usual" at the bank with hours remaining the same and the same "friendly, local employees that they have come to know."
"We will continue to communicate details to all of our stakeholders and we will work hard to make certain the transition is as seamless as possible for our customers," Collins stated.
In August, the Federal Reserve stated the bank is "significantly undercapitalized" and corrective action must be taken. The bank and the Federal Reserve had entered into an agreement in October 2009 requiring the bank's directors submit plans to improve the institution's financial position.
At that time, then bank CEO Brant Chappell said the institution had "been dealing with this for months."
It appears as though Chappell is no longer with First Banking Center. A phone call to him Monday was directed to George Morvis, of Financial Shares Corporation.
FBC's financial problems include a loss of $21.9 million during the second quarter of 2010. Chappell said the problems were a result of customer real estate loans "going sour" during the area and country's poor economic climate.
As of June 30, FBC had just more than $821 million in assets, but Chappell was confident the bank could raise the funds.
According to the Federal Reserve, the bank has three options, including raising capital through the sale of shares or contributions to surplus to be adequately capitalized by law, find another banking institution to purchase it or take other measures to become adequately capitalized. FBC is pursuing the first option.
First Banking Center has 17 branches, all in Southern Wisconsin, including several in the Walworth County area. The bank has three locations in Burlington, two in Lake Geneva, and one each in Genoa City, Lyons and Pell Lake.
First Michigan Bancorp Inc., is a bank holding company headquartered in Troy, Michigan. Its wholly owned subsidiary, First Michigan Bank is locally-operated financial institution that provides services to individuals, professionals and their businesses under the First Michigan Bank and in Wisconsin under the First Banking Center name.