Racine’s Bank of Elmwood is first Wisconsin bank ordered closed

Tri City National Bank assumes all deposits, branch locations of shuttered bank

On Friday, Racine-based Bank of Elmwood became the first Wisconsin bank closed by regulators since the recession began. To date, federal officials have closed 106 banks around the country.

The Wisconsin Department of Financial Institutions ordered the bank to close and asked the Federal Deposit Insurance Corp. (FDIC) to act as receiver. Oak Creek-based Tri City National Bank purchased all of Bank of Elmwood’s deposits and most of its assets.

The Wisconsin DFI closed Bank of Elmwood because its level of non-performing loans could not be overcome, said Michael Mach, administrator of the division of banking with the state agency.

As of Sept. 30, Bank of Elmwood had $327.4 million in total assets and about $273 million in deposits.

Tri City National Bank purchased Bank of Elmwood through a competitive bidding process facilitated by the Federal Deposit Insurance Corp. (FDIC).

With the purchase of Bank of Elmwood, Tri City has 44 branches.

“This acquisition complements (Tri City’s) existing network of branches, increasing our branch footprint from two to seven locations in the Racine and Kenosha marketplace, fits well with our strategic growth plans and increases our overall branch network in southeastern Wisconsin,” said Ronald Puetz, chairman and CEO of Tri City Bankshares Corp., the corporate parent of Tri City National Bank.

“We believe this acquisition allows us to efficiently leverage our strong capital base to continue to grow the company while providing Elmwood customers with expanded services from a well capitalized financial institution.”

The FDIC estimates that the cost to its deposit insurance fund will be about $101 million, and that Tri City’s purchase of Bank of Elmwood was the least costly resolution to the situation.

The most recent bank closure in Wisconsin was on Jan. 1, 2008, according to Kurt Bauer, president and CEO of the Wisconsin Bankers Association. The relative scarcity of bank closures here says much about the state’s banking culture, he said.

“The conservative lending culture of Wisconsin banks has served our state and industry well,” Bauer said. “Economic conditions across Wisconsin are weak and because of that fact, banks will continue to face challenging times. The most important thing for the public to remember is that insured deposits are safe and that Wisconsin banks as a whole are stronger than peers nationally. While the state is clearly not immune to the effects of the economic downturn, Wisconsin banks continue to outperform their peers nationally in many key categories, including profitability, lending, deposit growth and liquidity. Wisconsin banks also report fewer problem loans than U.S. banks as a whole."


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