From BizTimes.com – Regulators close Legacy Bank of Milwaukee
Minority-owned Legacy Bank of Milwaukee was closed today by the Wisconsin Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.
To protect the depositors, the FDIC entered into a purchase and assumption agreement with Seaway Bank and Trust Company of Chicago to assume all of the deposits of Legacy Bank. The sole branch of Legacy Bank in downtown Milwaukee at 2102 W. Fond du Lac Ave. will reopen on Saturday as branch of Seaway Bank and Trust Company. Depositors of Legacy Bank will automatically become depositors of Seaway Bank and Trust Company.
Legacy Bank was founded in 1999 by three Milwaukee African-American women -Deloris Sims, Margaret Henningsen and Shirley Lanier. They raised $5 million startup capital to open the inner city bank.
Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of Legacy Bank should continue to use their existing branch until they receive notice from Seaway Bank and Trust Company that it has completed systems changes to allow other Seaway Bank and Trust Company branches to process their accounts as well.
This evening and over the weekend, depositors of Legacy Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.
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 will retain 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. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, please visit: http://www.fdic.gov/bank/individual/failed/lossshare/index.html.
Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-430-7974. Interested parties also can visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/legacy-wi.html.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $43.5 million. Legacy Bank is the 25th FDIC-insured institution to fail in the nation this year, and the third in Wisconsin. The last FDIC-insured institution closed in the state was Badger State Bank, Cassville, on Feb. 11.