FDIC closes Milwaukee’s Legacy Bank, facilitates sale to Chicago bank

Milwaukee’s Legacy Bank was closed Friday afternoon by the state Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.

The FDIC facilitated the purchase of the bank and selected assets by Seaway Bank and Trust Co. of Chicago. Legacy Bank’s sole branch at 2102 W. Fond do Lac Ave. reopened on Saturday as a branch of Seaway Bank and Trust.

As of Dec. 31, 2010, Legacy Bank had approximately $190.4 million in total assets and $183.3 million in total deposits. In addition to assuming all of the deposits of the failed bank, Seaway Bank and Trust Company agreed to purchase approximately $165.9 million of Legacy Bank’s assets. The FDIC has retained the remaining assets for later disposition.

The FDIC and Seaway Bank and Trust Company entered into a loss-share transaction on $120.0 million of Legacy Bank’s assets. Seaway Bank and Trust Company will share in the losses on the asset pools covered under the loss-share agreement.

Legacy Bank had struggled with a portfolio of bad loans for some time. Last spring, the state DFI and the Federal Reserve System ordered it to raise capital, strengthen board oversight of the bank’s operations, strengthen credit risk management practices and write down losses.

At the time, the bank had $236 million in assets under management, which shrunk to the present $190.4 million.

In November, Jose Mantilla, Legacy Bank’s president, said the bank raised capital throughout 2010 and had raised a “significant” amount of funds.

 

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