The seven offices of The First National Bank of Danville will reopen on Monday as branches of First Financial Bank of Terre Haute, Ind., which assumed all of the bank's deposits. As of April 30, The First National Bank had total assets of $166 million and total deposits of $147 million.
The PrivateBank and Trust Co. of Chicago agreed to assume all of the deposits of Founders Bank. Its 11 offices will reopen on Monday as branches of The PrivateBank, which also agreed to buy $888.4 million of assets.
As of April 30, Founders Bank had total assets of $962.5 million and total deposits of $848.9 million.
Millennium State Bank of Texas became the first bank in Texas to fail this year. Its sole office will reopen on Monday as a branch of Irving, Texas-based State Bank of Texas, which is assuming all of Millennium's deposits. State Bank of Texas also agreed to buy essentially all of the bank's assets.
As of June 30, Millennium had total assets of about $118 million and total deposits of $115 million.
Under new rules proposed Thursday by the FDIC, private equity firms seeking to buy failed banks would face strict capitalization and disclosure requirements, but some regulators already warn the proposal may go too far.
The FDIC is seeking to expand the number of potential buyers for the growing number of banks it has closed during the financial crisis. With mounting interest from private equity firms, whose methods and motives aren't always clear, the FDIC is trying to set requirements to ensure the banks won't fail again.
One of the new proposals under discussion would require investors to maintain a healthy amount of cash in the banks they acquire, keeping them at about a 15-percent leverage ratio for three years. Most banks have lower leverage ratios, which measure capital divided by assets.
Investors also would have to own the banks for at least three years and face limits on their ability to lend to any of the owners' affiliates.
Regulators said their intent was to tap into the potentially deep source of private equity, while ensuring that banks remain well capitalized once they are sold.
"We want nontraditional investors," FDIC Chairman Sheila Bair said at the board meeting. "There is a significant need for capital and there is capital out there."
Still, some regulators worried that the rules could stifle a potentially valuable new source of investment. Bair said the proposal was "solid," but acknowledged that some details, including the high capital requirements, could be controversial.
Comptroller of the Currency John Dugan said that the rules, which will now be subject to public comment, may be too restrictive.
The Private Equity Council, a Washington-based advocacy group for firms, criticized the proposed FDIC guidelines.
