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

FL, GA & NM Banks Fail

Recent mortgage-related operations to close

June 26, 2010

By staff

Regulators shut down banks in Florida, Georgia and New Mexico Friday -- all of which had only a small share of their assets tied up in residential loans. In addition, a credit union with nearly $1 billion in assets was thrown into conservatorship.

The Florida Division of Financial Institutions took possession of Englewood, Fla.-based Peninsula Bank and appointed the Federal Deposit Insurance Corp. as receiver. The company was founded in 1986, had 138 employees and was hit with an FDIC cease-and-desist order in November 2009.

Premier American Bank assumed all of the failed bank's $580 million in deposits at par and acquired all of its $644 million in assets including $153 million in commercial mortgages, $146 million in construction-and-development loans and $30 million in home loans. The FDIC agreed to a $438 million loss-sharing arrangement, pushing its estimated losses to $195 million.

After that, the Office of the Comptroller of the Currency seized First National Bank in Savannah, Ga. The OCC blamed "substantial dissipation of assets and earnings due to unsafe and unsound practices" for First National's demise and noted that "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."

The FDIC, which is appointed receiver for all failed banks, sold all of the 14-year-old bank's $232 million in deposits for an 0.11 percent premium to The Savannah Bank -- which also acquired some of First National's $232 million in assets that included $70 million in C&D loans, $53 million commercial real estate loans and $45 million in residential loans. First National had 32 employees.

The FDIC was left with most of First National's assets. It projected that the costs to its Deposit Insurance Fund as a result of the failure will be $69 million.

Friday's final bank failure was High Desert State Bank, which was shuttered by the New Mexico Financial Institutions Division. The 15-employee bank was founded in 1999, was hit with an FDIC prompt corrective action in February and faced a June 2009 cease-and-desist order from the FDIC.

First American Bank assumed the Albuquerque, N.M., bank's $81 million in deposits at par and acquired all of its $80 million in assets -- which included $29 million in C&D loans, $16 million in one- to four-unit mortgages and $11 million in commercial mortgages. Factoring in a $68 million loss-sharing agreement, the FDIC expects to lose $21 million as a result of High Desert's failure -- the 86th FDIC-insured bank failure this year.

Also on Friday, the National Credit Union Administration said it threw Arrowhead Central Credit Union into conservatorship. The failed institution had 152,000 members and $876 million in assets.

The NCUA will continue to service the members of the San Bernardino, Calif., credit union.

"The decision to conserve a credit union enables the institution to continue normal operations with expert management in place correcting previous service and operational weaknesses," the NCUA stated. "Arrowhead Central Credit Union was placed into conservatorship due to declining financial condition."

Arrowhead was the 10th credit union collapse during 2010 and the 108th mortgage-related closing tracked by this year.

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