State banking regulators in Georgia seized a $174 million financial institution following the criminal indictment of one of its directors who hasn’t been seen for nearly a month. Acquaintances were warned by the director of his plans for suicide.
The Georgia Department of Banking and Finance seized and closed down Montgomery Bank & Trust on Friday. An order was obtained from the Superior Court of Montgomery County appointing the Federal Deposit Insurance Corp. as receiver.
“The department took possession of Montgomery Bank & Trust pursuant to the Official Code of Georgia, Section 7-1-150(a), which authorizes the department in its discretion to take possession of the business and property of any state chartered financial institution whenever such financial institution is either insolvent or operating in an unsafe or unsound condition to transact its business, is operating in violation of any court order, statute, rule or regulation, or requests the department to take possession of its business and property,” the state said.
Montgomery Bank was founded in 1926 and employed around 45 people at the time of its demise. It had $33 million in residential loans, $36 million in commercial real estate loans and $8 million in construction-and-land-development loans on its books.
A $5,000 civil money penalty was issued by the FDIC against the bank and Gregory A. Morris in April 2011, while it faced an FDIC cease-and-desist order in October 2009.
Following a secret FDIC bidding process, Ameris Bank was awarded the winning bid. The deal calls for Ameris to assume all of the Ailey, Ga., bank’s $164 million in total deposits based on data as of March 31 and acquire $12 million of its $174 million in total assets.
Deposit Insurance Fund losses tied to Montgomery Bank’s failure — the 32nd FDIC-insured failure so far in 2012 — are estimated to exceed $75 million.
The huge losses in proportion to the bank’s assets appear to be partly the result of an embezzlement scheme by a member of the bank’s board of directors.
A July 2 announcement from the Department of Justice indicated that one of Montgomery Bank’s directors has been missing since around the middle of June.
“Aubrey Lee Price disappeared after telling acquaintances that he had lost a large amount of money through trading activities and that he planned to kill himself,” the Justice Department stated.
Price became a director after the company he controlled, PFG LLC, acquired a controlling interest in the bank’s stock in December 2010. He took over responsibility of investing bank capital early last year and opened brokerage accounts that cleared through a securities clearing and custodial firm in New York. Bank management was told that the funds were being invested in Treasury securities.
But in a criminal complaint filed in U.S. District Court for the Eastern District of New York, the government alleges that Price fraudulently wired the funds to accounts that he personally controlled at other financial institutions instead of making the promised investments. Altered documents provided to bank management made it appear as if he had invested the money in Treasury securities.
He has been charged with embezzling around $17 million from the financial institution.
Price, 46, allegedly told acquaintances that he owns real estate in Venezuela and Guatemala. He recently traveled to Venezuela and returned from the trip on June 2.
“Price was last sighted boarding a ferry boat in Key West, Fla., bound for Fort Myers, Fla., and has been missing since at least June 16, 2012,” the announcement said.
Montgomery Bank was the 53rd mortgage-related casualty tracked so far this year by Mortgage Daily.
Following the migration of 326 capitalizing members to Catalyst Corporate Federal Credit Union, Western Bridge Corporate Federal Credit Union was liquidated, the National Credit Union Administration said Saturday. Capital contributed exceeded $50 million. Western Bridge Western Bridge was created as a temporary entity to assume the operations of Western Corporate Federal Credit Union, which was placed in conservatorship by the NCUA in March 2009.
Ally Bank has been advising its 70 warehouse clients that it will wind down its warehouse lending business by the end of the year, though it will give them time to secure new lines of credit from other lenders, National Mortgage News reported. But the parent of bankrupt Residential Capital LLC will continue to purchase loans through its correspondent and wholesale channels.
