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

Week's Bank Failures to Cost Over $120 million

Recent closings of financial institutions

July 17, 2011

By staff

Four banks with nearly $700 million in assets failed Friday, potentially costing the nation's Deposit Insurance Fund more than $120 million.

High Trust Bank was shuttered Friday by the Georgia Department of Banking and Finance. Once a bank is closed by its regulator, the Federal Deposit Insurance Corp. then steps in as receiver -- and that was the case with 45-year-old High Trust.

The Stockbridge, Ga., institution had $193 million in total assets as of March 31 -- including $14 million in home loans, $101 million in commercial real estate loans and $27 million in construction-and-development loans. Total deposits at the 22-employee firm stood at $190 million.

A cease-and-desist order was issued by the FDIC against High Trust in November 2009 and modified in December 2010.

Georgia's banking department also closed down One Georgia Bank in Atlanta. The five-year-old company had $186 million in assets -- including $11 million in residential loans, $74 million in CRE assets and $24 million in C&D loans. Deposits at the 25-employee bank, which faced an FDIC cease-and-desist order in March 2010, were $162 million.

The winning bid for both High Trust and One Georgia was made by Ameris Bank, which negotiated a loss-sharing agreement with the FDIC on $165 million of High Trust's assets and $146 million of One Georgia's holdings.

Factoring in the loss-sharing agreements, the FDIC predicted that the failure of High Share will cost the Deposit Insurance Fund $66 million, while One Georgia's demise was projected to cost $44 million.

Further south, in Port Saint Lucie, Fla., the state's Office of Financial Regulation seized control of First Peoples Bank -- which was founded in 1999 and had 71 employees.

All of First Peoples' $228 million in assets -- including $17 million in one- to four-unit mortgages, $112 million in commercial mortgages and $12 million in C&D loans -- were acquired by Premier American Bank. In addition, Premier American picked up the failed bank's $210 million in deposits.

Despite the substantial size of First Peoples, the FDIC -- which hit the bank with a prompt corrective action in January and a cease-and-desist order in March 2010 -- only expects to lose $7 million from its failure. The FDIC said it will acquire a value appreciation instrument as part of the transaction.

Friday's final bank failure was Summit Bank in Prescott, Ariz., which was seized by the Arizona Department of Financial Institutions. An FDIC prompt corrective action was issued against Summit in February, while the bank faced an FDIC cease-and-desist order in July 2010 and a $3,960 FDIC civil money penalty in October 2009.

Nine-year-old Summit had just $72 million in assets, which were acquired by The Foothills Bank with the FDIC agreeing to share in losses on $11 million of the assets. Holdings included $7 million in residential mortgages, $39 million in commercial mortgages and $9 million in construction-and-land-development loans. The Foothills Bank also picked up the 17-employee bank's $66 million in deposits for an 0.25 percent premium.

Summit was the 55th FDIC-insured bank to close during 2011 and is expected to deplete the Deposit Insurance Fund by $11 million.

Also in Arizona, the National Credit Union Administration liquidated Vensure Federal Credit Union in Mesa. Vensure had just 140 members and $8 million in deposits. The credit union was originally placed into conservatorship by the NCUA in April.

From Jan. 1 through July 15, has tracked the closing or failure of 81 mortgage-related businesses and operations.

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