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



Four Failed Financial Institutions

Recent bank and credit union failures

Feb. 5, 2011

By MortgageDaily.com staff


Four financial institutions in three states fell last week as the Great Recession proved too much for them. Between them, the institutions had around a half billion dollars in assets.

In Roswell, Ga., the state's Department of Banking and Finance took possession of American Trust Bank and, with an order in hand from the Superior Court of Oconee County, appointed the Federal Deposit Insurance Corp. as receiver.

The state was authorized to make the seizure under the Official Code of Georgia, Section 7-1-150(a), which authorizes such a move when a financial institution is "insolvent or operating in an unsafe or unsound condition to transact its business, is operating in violation of any court order, statute, rule or regulation, or requests the department to take possession of its business and property."

American Trust, founded in 2003, employed 29 people. Its $238 million in assets included $13 million in one- to four-unit residential loans, $80 million in commercial real estate assets and $41 million in construction-and-development loans. The FDIC issued a cease-and-desist order against the bank in October 2009.

Renasant Bank agreed to acquire $147 million of the failed bank's assets with the FDIC sharing in losses on $94 million of the assets. It also assumed all of American Trust's $222 million in deposits. The FDIC projects $72 million in costs to its Deposit Insurance Fund as a result of American Trust's closure.

After that, the state seized North Georgia Bank.

The Watkinsville, Ga.-based company was established in 2000. As of Sept. 30, employee count stood at 27. Residential holdings were $39 million, commercial mortgage assets were $35 million and C&D loans on the balance sheet were $31 million.

The FDIC selected BankSouth as the winning bidder. BankSouth acquired around $124 million of the bank's $153 million in assets with the FDIC sharing in losses on $120 million of the assets. BankSouth also assumed most of its $140 million in deposits.

The FDIC's projected losses for North Georgia are $35 million.

Last week's final bank failure was Community First Bank - Chicago, which was closed down by the Illinois Department of Financial and Professional Regulation.

The bank was just five years old and had only 13 employees. Its residential holdings were $12 million, while commercial mortgages were $15 million and C&D assets were $7 million. In February 2010, Community First entered a formal agreement with the Federal Reserve Bank of Chicago.

The Chicago-based institution had just $51 million in assets, all which were acquired by Northbrook Bank and Trust Co. The FDIC agreed to a $43 million loss-sharing arrangement and expects related losses to reach nearly $12 million. Northbrook also assumed all of the $50 million in deposits at an 0.50 percent premium.

Community First was the 14th FDIC-insured failure this year.

Also on Friday, the California Department of Financial Institutions seized Oakland Municipal Credit Union and ordered its liquidation. The state cited inadequate capital in its decision to take possession of the 7,800-member institution.

The National Credit Union Administration was appointed liquidating agent of the Oakland, Calif.-based institution. The 47-year-old credit union's $88 million in assets were purchased by Western Federal Credit Union, which also assumed its liabilities.

Oakland was the first credit union failure of 2011.

So far this year, Mortgage Daily has tracked the closure of failure of 17 mortgage-related businesses or operations.

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