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The Mortgage Graveyard
Failed, closed and a c q u i r e d mortgage-related entities.

Failed Banks Had Nearly $600 Million in Assets

Recent mortgage-related casualties

Aug. 26, 2013

By Mortgage Daily staff

Last week's failure of two banks that combined had nearly $600 million in assets is expected to result in $90 million in losses.

Community South Bank failed on Friday, according to the Tennessee Department of Financial Institutions. The regulator blamed the bank's demise on impaired capital, unsound condition and an inability to continue normal operations.

The Parsons, Tenn.-based bank was established in August 1968 and was a subsidiary of Tennessee Central Bancshares Inc.

Community South had 14 locations and 123 employees as of March 31. Residential loan holdings totaled $38 million, while commercial real estate assets were $206 million and another $19 million in construction-and-development loans were on the balance sheet.

Named as receiver was the Federal Deposit Insurance Corp. -- which issued a cease-and-desist order against the bank in April 2011. The company's parent entered a written agreement with the Federal Reserve Bank of St. Louis in January 2012.

After a secret bidding process was conducted, the winning bid was awarded to CB&S Bank Inc. -- which assumed all of the failed bank's $378 million in deposits and acquired $122 million of its $387 million in total assets.

The Deposit Insurance Fund is expected to be depleted by $73 million as a result of Community South's failure.

Later that same day the Arizona Department of Financial Institutions seized Sunrise Bank of Arizona and handed it over to the FDIC as receiver.

The DFI said that the bank's financial condition was unsafe and unsound.

The five-branch bank was founded in May 1998 and owned by Capitol Bancorp Ltd.

Based in Phoenix, Sunrise had 69 employees as of March 31. Total deposits stood at $197 as of June 30, and total assets of $202 million included $17 million in home loans, $131 million in CRE loans and $6 million in C&D loans.

It was hit with an FDIC prompt corrective action in February 2011 and an FDIC cease-and-desist order in January 2010.

All of the failed bank's assets and deposits were taken over by First Fidelity Bank, N.A., at an estimated cost to the FDIC of $17 million.

Sunrise was the 20th FDIC-insured bank failure so far in 2013.

A order issued by Georgia's DeKalb County Superior Court found that the National African American Relationships Institute Inc. was in violation of a cease-and-desist order previously issued by the Georgia Department of Banking and Finance. The regulator originally filed its action on April 3.

The original order was issued after the state found that NAARI -- which also did business under the names NAARI Housing Counseling Agency, and -- was engaging in residential mortgage activities without a license or pursuant to an exemption from licensing laws.

"Pursuant to Georgia law, it is prohibited for any person to directly or indirectly solicit, process, place, or negotiate mortgage loans for others, or offer to solicit, process, place, or negotiate mortgage loans for others, including the renewal or refinancing of any such loan, without a mortgage license or pursuant to an exemption," the news release stated. "Information gathered which is sufficient to verify credit, employment, income, date of birth, etc. constitutes taking an application and requires a license."

Mortgage Daily has tracked the closing or failure of 45 mortgage-related entities so far in 2013.

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