Banking Bust: Chicago's Pulaski Savings Bank First To Fail In 2025
Get ready for more to fail this year…
Amidst growing concerns of turmoil within the banking sector in the United States, with bad debt and underwater loans on their books, another bank was forced to quietly shutter its doors in the first few weeks of 2025.
On January 17th, the Federal Deposit Insurance Corporation (FDIC) announced the closure of the Chicago, Illinois, bank Pulaski Savings Bank.
“The FDIC entered into a purchase and assumption agreement with Millennium Bank of Des Plaines, Ill., to assume all deposits of Pulaski Savings Bank,” the FDIC noted in its press release.
It added:
As of Sept. 30, 2024, Pulaski Savings Bank reported total assets of $49.5 million and total deposits of $42.7 million. Millennium Bank agreed to assume all deposits at the time of closing for a 4.61 percent premium. It will also purchase approximately $45.0 million of the failed bank’s assets. The FDIC will retain the remaining assets for later disposition.
The FDIC preliminarily estimates that the failure will cost its Deposit Insurance Fund (DIF) about $28.5 million. The estimate will change over time as assets are sold. Suspected fraud caused the higher estimated cost to the DIF.
Illinois Department of Financial and Professional Regulation (IDFPR) Secretary Mario Treto, Jr., said in a comment: “As a key component of Illinois’ regulatory structure, it is critical for IDFPR to safeguard the integrity of operations of state-chartered financial institutions across the Land of Lincoln. While we never aspire to take control or possession of a bank, this crucial step will ensure customers receive the service they deserve and have come to expect.”
As noted by the FDIC in its press release, the last bank to fail in the United States was Oklahoma-based First National Bank of Lindsay in October. The Office of the Comptroller of the Currency (OCC), who closed the bank, said in a statement at the time:
The OCC acted after identifying false and deceptive bank records and other information suggesting fraud that revealed depletion of the bank’s capital. The OCC also found that the bank was in an unsafe or unsound condition to transact business and that the bank’s assets were less than its obligations to its creditors and others.
The OCC is also referring this matter to the United States Department of Justice, which has a wide variety of tools to hold individuals accountable for criminal acts and focuses on victims in all of its matters.
AUTHOR COMMENTARY
Returning WinePress readers know that since the beginning of 2021 I have been warning that the banks were in trouble and sitting on a mountain of bad debt and insolvency. The collapse of Silicon Valley Bank (SVB) in 2023 was an early warning sign of things to come.
Commercial real estate (CRE) loans are of the biggest concern and will continue to put pressure on these institutions. Bloomberg reported in November of last year that roughly $2 trillion dollars of CRE debt will need to be refinanced by the end of this year. Part of the article reads:
“Refinancing risks are front and center” for owners of properties, from office buildings to stores to warehouses, Morgan Stanley analysts including Mr James Egan wrote in a note this past week. “The maturity wall here is front-loaded. So are the associated risks.”
The investment bank estimates office and retail property valuations could fall as much as 40 per cent from peak to trough, increasing the risk of defaults.
Adding to the headache, small and regional banks – the biggest source of credit to the industry in 2022 – have been rocked by deposit outflows following the demise of Silicon Valley Bank, raising concerns that will crimp their ability to provide finance to borrowers.
The wall of debt is set to get worse before it gets better. Maturities will climb for the coming four years, peaking at US$550 billion in 2027, according to the Morgan Stanley note.
Banks also own more than half of the agency commercial mortgage-backed securities (CMBS) – bonds supported by property loans and issued by US government-sponsored entities such as Fannie Mae – increasing their exposure to the sector.
[…] Still, when apartment blocks are excluded, the scale of the problems facing banks becomes even starker. As much as 70 per cent of the other commercial real estate loans that mature over the next five years are held by banks, according to the report.
“Commercial real estate needs to reprice and alternative ways to refinance the debt are needed,” the analysts said.
Needless to say, there is major turmoil coming to the banking sector this year; more collapses, more failures, and more consolidations. As I have repeatedly said, keep only what you need in these institutions to maintain a balance, pay bills and maintain a business if you have one; otherwise, store your money under your mattress or wherever you can safekeep your money.
Learn more about the banking problems below:
SEE:
Banking Bust: FDIC Reports $517 Billion In Unrealized Losses At Banks, 63 Face Immediate Insolvency
Banking Bust: Major Banks Close Thousands Of Branches Nationwide As More Signs Of Collapse Grow
Bank Bail-ins: US Regulators Warned To Be Ready To Handle Failed Clearing Houses
“Blank Check” Investment Firm Gets FDIC Approval To Snatch Up Failed US Banks
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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Excellent informational post, thanks.