On Friday, eight federally insured financial institutions were closed. Nearly $1.3 billion in losses are projected to the Deposit Insurance Fund as a result of Friday’s failures, which included three Georgia banks. No buyer was found for a Utah bank — impacting more than 100 employees.
After finding that American National Bank had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices, the Office of the Comptroller of the Currency seized the Parma, Ohio, institution and handed it over to the Federal Deposit Insurance Corporation as receiver — as is done when any federally insured bank fails.
“The bank incurred losses that depleted its capital, the bank is critically undercapitalized and there is no reasonable prospect that the bank will become adequately capitalized without federal assistance,” according to the OCC — which issued a cease-and-desist order against the institution in September 2009.
The National Bank and Trust Co. agreed to assume all of 46-year-old American National’s $67 million in deposits as of Dec. 31, 2009, at par and acquire all of its $70 million in assets — including $1 million in home loans and $39 million in commercial real estate loans. The FDIC agreed to a $50 million loss-sharing arrangement and expects to lose $17 million on the failure of the 22-employee institution.
Friday’s next failure was four-year-old Century Security Bank, which was closed by the Georgia Department of Banking and Finance. The 19-employee Duluth, Ga., bank’s $94 million in deposits as of Dec. 31 were assumed at par by Bank of Upson — which also acquired its $97 million in assets including $3 million in residential loans, $45 million in commercial mortgages and $11 million in construction-and-land-development loans. Factoring in an $82 million loss-sharing agreement, the hit to the Deposit Insurance Fund was estimated at $30 million.
Over in Draper, Utah, the Utah Department of Financial Institutions closed Advanta Bank Corp. The 18-year-old company was liquidated and its $1.5 billion in deposits as of the end of last year will be mailed back to bank account holders. Advanta had $1.6 billion in assets, and the FDIC — which issued a cease-and-desist order against the bank in November 2009 and both a C&D order and a civil money penalty five months earlier — expects to lose $636 million on its failure. Around 124 employees will be impacted by the bank’s collapse.
Next, Georgia closed Appalachian Community Bank in Ellijay, Ga., which had 209 employees. Community & Southern Bank agreed to assume all of the 15-year-old bank’s $918 million in deposits as of Dec. 31 and purchase all of its $1.01 billion in assets, which included $174 million in one- to four-family loans, $116 million in commercial mortgages and $255 million in C&D loans. The FDIC, which issued a cease-and-desist order against Appalachian in April 2009, agreed to share in losses on $799 million of the assets and pegged its costs at $419 million.
After that, the state shut down Bank of Hiawassee in Hiawassee, Ga. Citizens South Bank agreed to assume all of the 119-employee firm’s $340 million in deposits as of Dec. 31 and acquire all of its $378 million in assets including $69 million in home loans, $76 million in commercial mortgages and $108 million in C&D assets. The FDIC agreed to a $233 million loss-sharing deal and expects to lose $138 million on the collapse of the century-old bank.
At 5 p.m. Central on Friday, the Alabama State Banking Department took possession of 26-year-old First Lowndes Bank, as it is authorized to do under section 5-8A-20 of the Code of Alabama. First Citizens Bank assumed the $131 million in deposits of the Fort Deposit, Ala., bank, and acquired all of its $137 million in assets — which included $23 million in residential loans, $42 million in CRE loans and $7 million in construction-and-development loans. The FDIC is on the hook for losses on $104 million of the assets and projects its cost at $38 million. First Lowndes had 50 employees.
Friday’s seventh and final bank failure was 104-year-old State Bank of Aurora, which was closed by the Minnesota Department of Commerce. The Aurora, Minn., bank’s $28 million in deposits as of Dec. 31 were assumed by Northern State Bank at an 0.5 percent premium, while Northern State also acquired its $28 million in assets including $6 million in home loans, $8 million in commercial mortgages and $5 million in C&D loans. The company had just nine employees and was hit with an FDIC cease-and-desist order in March 2009. The FDIC will share in losses on $21 million of the assets and expects to lose $4 million as a result of the failure — the 37th FDIC-insured bank failure this year.
The National Credit Union Administration placed Tracy Federal Credit Union into conservatorship on Friday. The Tracy, Calif., credit union has $24 million in assets and 5,900 members who will continue to be served while the institution is in conservatorship. Tracy was the fifth credit union failure this year.
MortgageDaily.com has tracked 49 mortgage-related company closings so far this year.
