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Corporate Financing

Continental Illinois

1984

Continental Illinois, one of the nation's largest banks through the 1970s and '80s, spread itself too thin in the early '80s with aggressive commercial, industrial, and international lending. The trouble began in 1982 after Continental bought bad loans from the Penn Square Bank of Oklahoma without adequate due diligence. The bank's stock and credit ratings tumbled, and in May, 1984, depositors made an electronic run on the bank. The FDIC guaranteed the bank's $30 billion in uninsured deposits, assumed $3.5 billion of the company's debt, and contributed $1 billion in capital, essentially taking over the bank. New management was installed, and in 1994 Continental was acquired by Bank of America (BAC).