ALTAMONT — Even though Meridian Bank of Eldred failed last week, a federal banking spokeswoman said the bank’s Altamont branch is open under new ownership.

LaJuan Williams-Dickerson, a spokeswoman for the Federal Deposit Insurance Corporation, said all Meridian depositors automatically became depositors of National Bank of Hillsboro after National assumed responsibility for all Meridian deposits.

Williams-Dickerson said National submitted the high bid for Meridian’s deposits. She estimated the cost to the FDIC’s deposit insurance fund between $13 million and $14.5 million.

“Several other bids were received from healthy banks,” Williams-Dickerson said. The FDIC typically serves as a sort of auctioneer when a bank fails, soliciting bids from healthy institutions in effort to preserve customer services.

Williams-Dickerson said the transition from Meridian to National was seamless.

“The change occurred without most customers realizing anything had happened,” she said. “Customers could still write checks, use their ATM card and make loan payments.”

The Illinois Department of Financial Professional Regulation closed Meridian Friday. The FDIC immediately transferred Meridian assets to National.

Meridian’s offices in Altamont, Eldred and Carlyle were open as usual Friday as National branches. The Alton branch was expected to open today.

Williams-Dickerson said Meridian had total assets of $39.18 million and total deposits of $36.88 million as of Sept. 25. National bought $7.55 million of Meridian’s assets, with the FDIC retaining remaining assets for later disposition.

Williams-Dickerson declined to say why Meridian was shut down. Susan Hofer, a spokeswoman for the Illinois Department of Financial Professional Regulation, said the bank agreed to a cease and desist order July 8. The order was issued July 25 because of “unsafe and unsound banking practices,” according to the 24-page document.

According to the order, Meridian suffered from managerial lapses, as well as inadequate supervision by its board of directors. The bank also engaged in “hazardous lending and lax collection practices,” including:

• Failure to obtain proper loan documentation.

• Failure to obtain adequate collateral.

• Failure to establish an adequate loan review program.

• Failure to establish and enforce an adequate loan repayment program.

As a result, according to the order, Meridian had an excessive level of bad loans.

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