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

No Buyers for 2 of 4 Failed Banks

Recent financial institution failures

March 8, 2010

By staff

Buyers couldn't be found for two of last week's four bank failures -- pushing projected losses to more than $300 million.

The Florida Office of Financial Regulation closed down Sun American Bank on Friday and handed the Boca Raton, Fla.-based institution over to the Federal Deposit Insurance Corporation to handle receivership -- as is done with all federally insured bank and thrift failures. The institution faced a Dec. 22, 2009, prompt corrective action by the FDIC, while the Federal Reserve Bank of Atlanta entered a written agreement with the company and parent Sun American Bancorp the previous February.

First-Citizens Bank & Trust Co. assumed all of Sun American's $444 million in deposits as of Dec. 31, 2009, at par and acquired all of its $536 million in assets. The FDIC agreed to to share in losses on $433 million of the assets, pushing its estimated total losses on the failure to $104 million.

Following Sun American's seizure, Bank of Illinois was closed today by the Illinois Department of Financial Professional Regulation's Division of Banking. The 96-year-old bank was hit with a Federal Reserve Board prompt corrective action in November, while it entered a formal agreement with the Federal Reserve Bank of Chicago a month earlier.

Heartland Bank and Trust Co. took over the Normal, Ill., bank's $199 million in deposits as of Dec. 31 at a 3.61 percent premium and acquired all of its $212 million in assets, including $43 million in residential loans, $51 million in commercial mortgages and $31 million in construction-and-development loans. After factoring in a $167 million loss-sharing arrangement, the FDIC projected the cost to its Deposit Insurance Fund as a result of the 41-employee bank's failure at $54 million.

Next, the Office of Thrift Supervision closed Waterfield Bank, noting that the Germantown, Md.-based thrift "was critically undercapitalized and in an unsafe and unsound condition with no viable prospect of returning to profitability or restoring capital." The OTS issued a cease-and-desist order against Waterfield in October.

Waterfield had $156 million in deposits and assets as of Dec. 31. The FDIC, which was apparently unable to find a buyer for Waterfield, created an OTS charter for Waterfield Bank, FA, which will remain open until April 5 to enable an orderly liquidation of deposits. Losses have been pegged at $51 million.

Friday's fourth and final FDIC-insured institution to fail was Centennial Bank, which was closed by the Utah Department of Financial Institutions. The FDIC -- which issued a June 2009 cease-and-desist order against the Ogden, Utah, institution -- couldn't find a buyer and approved a payout of deposits.

Centennial, founded in 1997, had $205 million in deposits as of Dec. 31 and $215 million in assets -- including $16 million in home loans, $44 million in commercial real estate loans and $62 million in C&D loans. The bank had 50 employees.

The FDIC's losses have been projected at $96 million as a result of Centennial's failure -- the 26th this year.

Lawrence County School Employees Federal Credit Union was liquidated Friday by the National Credit Union Administration. The New Castle, Pa., institution had $3 million in assets and 1,085 members. A bid by First choice Federal Credit Union to acquire the failed credit union was accepted by the NCUA.

Lawrence County was the fourth credit union failure this year and the 36th mortgage-related failure tracked by

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