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

4 Bank Failures to Cost Over $100 Million

Bank failures on Feb. 11

Feb. 14, 2011

By staff

At less than $200 million in expected losses from four bank failures, it was a mild week for regulators.

The story began with the Florida Office of Financial Regulation's seizure of 45-employee Sunshine State Community Bank on Friday. The Federal Deposit Insurance Corp. took possession of the Port, Orange, Fla., bank as receiver, as always happens with federally insured bank failures.

A $4,000 civil money penalty was issued against Sunshine State by the FDIC four months ago, while the regulator hit the bank with a cease-and-desist order in September 2009.

Premier American Bank, N.A., assumed all of Sunshine State's $117 million in deposits for an 0.50 percent premium. Premier also acquired all of the decade-old bank's $126 million in assets including $21 million in residential loans, $49 million in commercial mortgages and $11 million in construction-and-development loans.

The FDIC projects $30 million in costs to its Deposit Insurance Fund as a result of Sunshine State's failure.

The action then moved to the Midwest, where the Michigan Office of Financial and Insurance Regulation closed down Hamtramck-based Peoples State Bank after the commissioner, Ken Ross, obtained a petition from the Ingham County Circuit Court. Ross noted that most banks in the state remain "strong" even though the economy is challenged.

Peoples was founded in 1909 and employed 111 people. In September 2009, the FDIC issued a cease-and-desist order against it.

The PSB Group Inc. subsidiary's $391 million in total assets -- including home-loan holdings of $77 million, commercial real estate assets of $211 million and just $12 million in C&D loans -- were acquired by First Michigan Bank, with the FDIC obligated to share in losses on $331 million of the assets. First Michigan also assumed all of the $390 million in deposits for an 0.25 percent premium.

Deposit Insurance Fund losses are predicted to come in at $87 million as a result of Peoples State's failure.

Further west, in Cassville, Wis., the Wisconsin Department of Financial Institutions closed down Badger State Bank. The deceased institution was founded in 1910 and had just 17 employees. It faced an FDIC prompt corrective action in May 2010 and an FDIC cease-and-desist order in April 2009.

Among Badger's $84 million in assets were $12 million in one- to four-unit residential loans, $18 million in CRE assets and less than $1 million in C&D holdings. Royal Bank acquired the assets and assumed Badger's $78 million in deposits. FDIC losses are expected to reach $18 million because of Badger's demise.

Friday's last failure was Canyon National Bank in Palm Springs, Calif. In its announcement of the seizure, the Office of the Comptroller of the Currency said it acted only after determining that a substantial dissipation of assets and earnings had occurred as a result of unsafe and unsound practices. A depletion in capital left the bank with no chance of surviving without government help, according to the OCC -- which issued a capital directive in October against Canyon National.

The bank held $33 million in residential loans, $88 million in commercial mortgage assets and $17 million in C&D loans.

The $211 million in total assets at 12-year-old institution were picked up by Pacific Premier Bank -- which also assumed the Canyon National's $205 million in deposits.

Canyon National will be last week's least costly failure for the FDIC: $10 million. The 70-employee firm was the 18th federally insured bank failure this year.

Mortgage Daily has tracked a total of 21 mortgage-related entities that closed down or failed so far in 2011.

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