Macomb, IL – Citizens National Bank in Macomb was shut down at the end of business hours on Friday May 22. The FDIC took over before the institution was sold to Morton Community Bank. The new owners say it will be business as usual at CNB.
Marvin Payne, Regional Ombudsman with the FDIC, says CNB failed for a couple reasons. "They sought and acquired high cost brokered money from out of the area," says Payne. "And then they took those funds and they invested it in commercial real estate. If you take a look at the downturn just in the general US economy - at that point in time the business strategy was not effective for this institution."
Payne says no depositers lost a single cent in the ownership change.
The company that had owned CNB was JGS Investments, which is located in Chicago's suburbs. It finalized the acquisition of CNB on February 1, 2006. Payne says the people from JGS no longer have anything to do with CNB.
The new owner, Morton Community Bank, is located in Morton in central Illinois. Co-owner Gordon Honegger says, with the acquisition of CNB, his bank now has $2 billion in assets.
Honegger says he decided to buy CNB because he thinks Morton and Macomb look like twins. "They're nice, local communities. They are central Illinois, solid-as-a-rock communities. And these are the communities we like to operate in as opposed to Chicago or St Louis," says Honegger.
Honegger says all of CNB's employees will keep their jobs and he plans to give bonuses to the workers. He considers the employees to be the bank's key asset.
Honegger also says he will donate $15,000 to charities in Macomb. It has not been decided which charities will receive money.
CNB's main branch on Macomb's courthouse square is normally closed on Saturdays but was open on May 23 so that employees could answer questions from people in the community. A couple Macomb police officers were stationed at the bank's front desk but there appeared to be no problems or panic at the bank.
News Director Rich Egger interviewed Marvin Payne of the FDIC and Morton Community Bank Co-owner Gordon Honegger on Saturday morning May 23. You can listen to that interview by clicking on the audio button.
The State of Illinois issued a news release on the CNB situation at 6:35pm on Friday May 22:
The Illinois Department of Financial and Professional Regulation's (IDFPR) Division of Banking today approved the purchase of selected assets and liabilities of Citizens National Bank, Macomb by Morton Community Bank, Morton, Illinois following Citizens National Bank's closure at 6:30 p.m. by the Office of the Comptroller of the Currency.
Today's action ensures that all customers of Citizens National Bank will not lose any funds. Citizens National Bank is the fifth state-chartered bank to fail in Illinois this year.
"On behalf of Illinois consumers, state financial regulators will continue our proactive financial regulation to ensure deposits and assets remain protected and that consumers always remain priority number one," said Michael T. McRaith, IDFPR Acting Secretary.
"Citizen National Bank was operating in an unsafe and unsound manner, and the bank's board of directors was either unable or unwilling to infuse the additional capital needed to keep the bank open," said Jorge Solis, Director of Banking.
Citizens National Bank had $445 million in assets at year end and 8 banking offices at the time of its closure. As of December 31, 2008, Morton Community Bank had assets of $1.8 billion and 27 banking offices throughout central Illinois.
Customers with questions about how deposit insurance works or who would like more information about the failure can visit the FDIC's web site or call the FDIC toll-free at 1-877-ASK FDIC.