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



Week's Bank Failure Costs Exceed $600 Million

Recent bank and credit union failures

Jan. 28, 2012

By MortgageDaily.com staff


This week's bank failures -- including a financial institution with more than $1 billion in assets -- more than doubled the number of federally insured banks that have been shut down so far during 2012. Losses from the latest round of closings are projected to exceed $600 million.

The Florida Office of Financial Regulation closed down First Guaranty Bank and Trust Company of Jacksonville on Friday. Like with all of Friday's bank failures, the Federal Deposit Insurance was named receiver of the fallen firm.

First Guaranty was established in 1947. As of Sept. 30, 2011, there were 79 people on staff. The bank owned $75 million in residential loans, $172 million in commercial real estate loans and $14 million in construction-and-development loans. It was hit with an FDIC cease-and-desist order in August 2010.

CenterState Bank of Florida, N.A, assumed all of the bank's $350 in deposits and acquired its total assets of $378 million with the FDIC agreeing to share in losses on $293 million of the assets.

The Deposit Insurance Fund is expected to be depleted by $82 million as a result of First Guaranty's demise.

Next, the Tennessee Department of Financial Institutions took possession of Tennessee Commerce Bank. The state blamed the failure on impaired capital, an unsound condition and an inability to continue normal operations.

With $1.126 billion in total deposits and $1.185 billion in total assets, Tennessee Commerce was Friday's biggest bank failure. It was founded in 2000 and had around 87 employees at the time it was seized. On the Franklin, Tenn.-based bank's books were $40 million in home loans, $284 million in CRE assets and $108 million in C&D holdings.

All of its deposits were assumed by Republic Bank & Trust Co., which also picked up $204 million of its assets.

The FDIC, which issued a consent order against the bank in May 2011 and a prompt corrective action in November 2011, said it expects to lose $417 million as a result of Tennessee Commerce's closing.

After that, 14-year-old Patriot Bank Minnesota was seized by the Minnesota Department of Commerce. The bank operated from Forest Lake, Minn.

First Resource Bank agreed to assume all of the 26-employee bank's $108 million in total deposits and acquired all of its $111 million in total assets -- including $2 million in residential loans, $27 million in commercial mortgages and $19 million in C&D loans -- with the FDIC agreeing to a loss-sharing arrangement on $79 million of the assets. The FDIC, which issued a cease-and-desist order against the bank in September 2010, pegged related losses at $33 million.

Friday's final bank failure was BankEast, which was closed down by the Tennessee Department of Financial Institutions. The 84-employee institution started business in 1968. It was hit with a Federal Reserve Board prompt corrective action in December 2010 and entered a formal agreement with the Federal Reserve Board in March 2009,

"The department took possession of BankEast due to BankEast's impaired capital, unsound
condition and the bank's inability to continue normal operations," the state said.

U.S. Bank, N.A., acquired all of BankEast's $273 million in total assets including $30 million in one- to four-unit residential loans, $82 million in CRE loans and $38 million in C&D loans. U.S. Bank additionally assumed the bank's $269 million in total deposits.

Deposit Insurance Fund losses are expected to reach $76 million as a result of BankEast's failure -- the seventh FDIC-insured bank failure this year.

Also on Friday, the National Credit Union Administration liquidated 51-year-old Eastern New York Federal Credit Union. The $49 million financial institution was based in Napanoch, N.Y., and served 6,800 members who were state and government industry employees.

"NCUA made the decision to liquidate Eastern New York Federal Credit Union and discontinue its operations after determining the credit union was insolvent and has no prospect for restoring viable operations on its own," the regulator said.

Eastern New York, the second credit union failure tracked this year by Mortgage Daily, was taken over by USAlliance Federal Credit Union, which has $748 million in assets and 46,515 members.

Including banks, credit unions and non-bank lenders, the failure or closing of 10 mortgage-related businesses has been tracked so far this year by Mortgage Daily.

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