The Bank of Elmwood, with branches in Kenosha and Racine, was closed Friday by the Wisconsin Department of Financial Institutions’ Division of Banking after failing to meet a September deadline to boost its financial position.

Bank of Elmwood is the 104th FDIC-insured institution to fail in the nation this year, and the first in Wisconsin. It was one of seven banks closed nationally Friday, including one each in Illinois and Minnesota.

To protect patrons, the FDIC was immediately appointed receiver for the bank. Through a purchase agreement with the FDIC, Tri City National Bank, based in Oak Creek, will assume all of the deposits of the Bank of Elmwood.

The Bank of Elmwood’s five branches will reopen today as branches of Tri City National Bank. Depositors of the Bank of Elmwood will automatically become depositors of Tri City National Bank and deposits will continue to be insured by the FDIC.

“Wisconsin is not immune from the national economic downturn and as the economy improves we are optimistic that Wisconsin’s banks also will see an improvement.” said Secretary of the Department of Financial Institutions, Lorrie Keating Heinemann. “We are pleased that a strong Wisconsin Bank, Tri City National, will continue to provide banking services for the customers of the Bank of Elmwood.”

As of Sept. 30, the Bank of Elmwood had total assets of $327.4 million and total deposits of approximately $273.2 million. In addition to assuming all of the deposits of the failed bank, Tri City agreed to purchase essentially all of the assets.

The FDIC estimates the cost to the Deposit Insurance Fund will be $101.1 million. Tri City National Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives, federal officials stated. Tri City National Bank did not pay the FDIC a premium for the deposits of Bank of Elmwood.

The Fed wanted the Bank of Elmwood to meet a long list of requirements aimed at improving its financial status because of questions that came out of a routine exam last fall. That exam revealed the bank lost $6.6 million in 2008, compared to a profit of $3.51 million in 2007.

Chairman and Chief Executive Officer Jess Levin said in September the economy was to blame for the bank’s difficulties and its struggle to meet the requirements. In a released statement, Levin said the bank serves the types of customers who are being hurt the most in the recession, including blue collar workers and minority businesses.