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

Costly Bank Closings

Recent financial institution failures

Feb. 19, 2011

By staff

A quartet of bank closings will cost the country's Deposit Insurance Fund over a quarter-billion dollars. In all, six financial institutions failed this past week.

An early casualty Friday was 77-year-old Habersham Bank, which was closed by the Georgia Department of Banking and Finance. The 90-employee institution owned $60 million in home loans, $78 million in commercial mortgages and $83 million in construction-and-development loans.

The Federal Deposit Insurance Corp., which is named as receiver whenever a federally insured bank fails, sold the Clarkesville, Ga.-based company's $388 million in total assets to SCBT, N.A., with the FDIC sharing in losses on $271 million of the assets. SCBT also assumed all of Habersham's $340 million in deposits.

Around $90 million in losses are expected from Habersham's failure.

Georgia regulators followed up Habersham's seizure with the closing of Citizens Bank of Effingham.

The Springfield, Ga.-based bank was issued a cease-and-desist order by the FDIC in May 2010. It was founded in 1998, and had around 42 employees at the time of its demise. One-to-four unit residential holdings were $47 million, commercial real estate loans were $52 million and C&D assets were $33 million.

The winning bid for Citizens was made by HeritageBank of the South, which assumed its $207 million in deposits for a 1 percent premium and acquired all of its $214 million in assets with the FDIC sharing in losses on $158 million of the assets and projecting a $59 million hit to its Deposit Insurance Fund.

Inadequate capital and a lack of earnings had the California Department of Financial Institutions closing Charter Oak Bank -- a 29-employee institution founded in 2004 with $23 million in residential mortgages, $36 million in commercial mortgages and $14 million in C&D loans.

Five months ago, Charter Oak faced an FDIC cease-and-desist order.

Bank of Marin stepped in and assumed all of the Napa, Calif.-based institution's $105 million in deposits. The FDIC noted that it will retain $29 million of Charter Oak's $121 in assets, suggesting that Bank of Marin picked up $92 million of the assets. Around $22 million in losses are expected from Charter Oak's collapse

Friday's fourth FDIC-insured bank failure -- and the 22nd so far this year -- was 12-year-old San Luis Trust Bank, FSB, which was shuttered by the Office of Thrift Supervision. The OTS called the San Luis Obispo, Calif.-based bank "critically undercapitalized" and said it had a negative net worth. The regulator had issued a cease-and-desist order against the 28-employee company in November 2009.

First California Bank acquired all of San Luis' $333 million in assets -- including residential holdings of $96 million, CRE assets of $67 million and C&D loans totaling $48 million. The FDIC will participate in losses on $242 million of the assets. First California also assumed the failed institution's $272 million in deposits.

Deposit Insurance Fund losses from San Luis' failure are pegged at $96 million.

On Wednesday, the NCUA placed 64-year-old Family First Federal Credit Union into liquidation. The Orem, Utah's institution's 18,000 members will now be served by Security Service Federal Credit Union, which acquired Family First's $119 million in assets.

A day after that, the Greensburg Community Federal Credit Union of Greensburg in Pennsylvania was thrown into conservatorship, and the National Credit Union Administration assumed control of operations. The 983 members of the $2 million credit union will receive uninterrupted service as the NCUA appoints "expert management" that can correct prior weaknesses.

Greensburg was the third credit union failure tracked by this year. In all, the closing or failure of 27 mortgage-related businesses has been reported by

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