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



121-Year-Old Bank Among 2 to Fail

Recent mortgage-related businesses to close

Feb. 11, 2012

By MortgageDaily.com staff


Two midwest banks were closed by the national regulator of banking institutions, including one that was more than a century old. Meanwhile, a net branch operation that had previously touted a planned transition from mortgage broker to mortgage banker has since vanished.

Charter National Bank and Trust was closed down by the Office of the Comptroller of the Currency on Friday. The Hoffman Estates, Ill., bank saw its assets and losses deteriorate as a result of unsafe and unsound practices, and the OCC said it was "critically undercapitalized" to the point that it could not survive without government assistance.

The bank was chartered in July 1980 and had around 31 full-time employees at the time of its demise. Its home-loan holdings were $23 million as of Sept. 30, 2011, while it also owned $31 million in commercial mortgages and $6 million in construction-and-land-development loans.

As was the case with both of Friday's bank failures, the Federal Deposit Insurance Corp. was appointed receiver. The FDIC had issued a cease-and-desist order against the institution in April 2010.

All of Charter's $90 million in total deposits were assumed by Barrington Bank & Trust Company, N.A., while all of the failed bank's $94 million in assets were purchased by Barrington with the FDIC agreeing to share losses on $72 million of the assets. The hit to the Deposit Insurance Fund is expected to be $17 million.

Next, the OCC shuttered SCB Bank.

"The OCC acted after the institution had experienced substantial dissipation of assets and earnings due to unsafe or unsound practices," the federal regulator said in a statement. "The OCC also found that the institution is likely to incur losses that will deplete its capital and that the institution is critically undercapitalized, and there is no reasonable prospect that it will become adequately capitalized without federal assistance."

The 57-employee bank was founded in 1891. Its residential mortgage holdings were $50 million, and it owned $53 million in commercial real estate loans and $6 million in C&D assets.

SCB had $172 million in deposit that were all assumed by First Merchants Bank, N.A. In addition, First Merchants acquired all of the Shelbyville, Ind.-based bank's $183 million in total assets.

Losses from SCB's failure are pegged at $34 million. SCB was the ninth FDIC-insured bank failure and the 13th mortgage-related operation to close so far in 2012.

At the beginning of 2009, 1st Metropolitan Mortgage operated 185 branches. The Charlotte, N.C.-based lender, which was founded in 1983 by Daniel H. Jacobs, employed a thousand people at its peak.

By March 2009, the company was down to just 74 branches and 675 employees. In May of that same year, 1st Metropolitan said it was being acquired by Hestia Financial Inc. and would become part of Hestia-subsidiary Mirad Financial group. The acquisition was supposed to enable the net branch operator to transition from a mortgage broker to a mortgage banker.

Fast forward to 2012, and there is no sign that 1st Metropolitan or Mirad still exist and no indication that Hestia even has an active mortgage business. On its website at www.hestiafinancialinc.com, Hestia says it owns Brightgreen Home Loans Inc., "a full-service mortgage lender opening offices nationwide." But the link to www.brightgreenhomeloans.com only leads to an inactive website.

The Better Business Bureau in Charlotte, N.C., reports that Bright Green filed for reorganization under Chapter of 11 of the U.S. Bankruptcy Code in May 2011. The BBB notes, "It appears that this business is no longer in business."

Empire Equity Group Inc. dba 1st Metropolitan is named as a defendant in a lawsuit that was filed on June 18, 2009, by loan originators who claim they weren't paid for overtime. An answer to an amended complaint was filed in December 2011 by the defendants.

Jacobs now lists his position on Linkedin as "president of retail branching" at Residential Finance Corp.


In re. Bright Green Home Loans Inc.
Case No. 11-33050, May 2, 2011 (U.S. Bankruptcy Court for the Northern District of California).

Robinson et al v. Empire Equity Group Inc. et al.
Case No. 1:09-cv-01603-WDQ, June 18, 2009 (U.S. District Court for the District of Maryland.)

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