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OCC shutters Chicago-based Washington Federal Bank for Savings

The Office of the Comptroller of the Currency on Dec. 15 closed Chicago-based Washington Federal Bank for Savings — becoming the eighth bank to fail in the U.S. in 2017.

The OCC appointed the Federal Deposit Insurance Corp. receiver, which in turn entered into a purchase and assumption agreement with Chicago-based Royal Savings Bank to assume the insured deposits of the failed bank.

Royal Savings Bank agreed to assume the insured deposits for a 1.26% premium, and will also buy roughly $23.7 million of the closed bank's assets.

The FDIC, which will retain the remaining assets for later disposition, estimates that the failure will cost its deposit insurance fund $60.5 million.

As of Sept. 30, Washington Federal Bank for Savings had total assets of $166.3 million and total deposits of $144 million, of which there were about $11.6 million that exceeded FDIC insurance limits, with this estimate likely to change once the FDIC obtains additional data from these customers, according to the FDIC press release.

Washington Federal Bank for Savings' two branches will reopen as branches of Royal Savings Bank during their normal business hours starting Dec. 16.

It is the third bank failure in Illinois in 2017. The last bank failure in the state was St. Elmo-based Fayette County Bank, on May 26.

In a company press release, Royal Savings Bank parent Royal Financial Inc. said that neither the company nor the bank acquired any assets, common stock, preferred stock or debt, or assumed any other obligations, of Washington Bancshares Inc., the now-former savings and loan holding company for Washington Federal Bank for Savings.

Royal Savings Bank bought around $132.4 million in insured deposits — checking, savings, money market and certificates of deposit — offset with cash, according to the news release.

Royal Financial was advised by Howard and Howard Attorneys PLLC as legal counsel and RP Financial LC as financial adviser.

Separately, the OCC said in a press release that it "acted after finding that the bank had experienced substantial dissipation of assets due to unsafe or unsound practices, and that the bank's assets were less than its obligations to its creditors and others."