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

7 Institutions Seized

Recent mortgage-related firms to close or fail

July 31, 2010

By staff

Five banks with nearly $2 billion in assets failed Friday at an estimated cost of more than $300 million to the nation's fund for deposit insurance. Four of the failed banks previously faced cease-and-desist orders. In addition, two credit unions were seized by regulators last week.

The first seizure was NorthWest Bank and Trust by the Georgia Department of Banking and Finance and, as is done with every failure of a federally insured bank, the institution was handed over to the Federal Deposit Insurance Corp. as receiver. The FDIC agreed to a $108 million loss-sharing arrangement and expects NorthWest's failure to cost the Deposit Insurance Fund $40 million.

The next to go was a small bank in Port St. Joe, Fla.: Bayside Savings Bank. The Office of Thrift Supervision, which closed Bayside, said the bank was undercapitalized and had no reasonable prospect of becoming adequately capitalized. On Dec. 22, 2009, Bayside was hit with an OCC cease-and-desist order.

The failure of Coastal Community Bank is expected to deplete the Deposit Insurance Fund by $95 million. The Panama City, Fla.-based bank was shuttered by the Florida Office of Financial Regulation. Coastal, which survived the Great Depression, faced an FDIC prompt corrective action on April 5 and an FDIC cease-and-desist order on April 22, 2009.

Both Bayside and Coastal were acquired by Centennial Bank.

"Inadequate capital and severe loan losses" were cited for the Washington Department of Financial Institutions' closure of The Cowlitz Bank. Large loan losses tied to land development and construction lending ate into the Longview, Wash.-based company's capital. Parent Cowlitz Bancorporation entered a formal agreement with the Federal Reserve Bank of San Francisco on June 2, while The Cowlitz Bank faced an FDIC cease-and-desist order on Jan. 27.

"The failure of Cowlitz Bank is an unfortunate example of the severe consequences these exceptionally challenging economic times bring for our financial institutions that have been heavily committed to commercial real estate land acquisition and construction lending," DFI Director Scott Jarvis said in the news release.

The final bank failure on Friday was LibertyBank, which was closed by the Oregon Department of Consumer and Business Services. The state said the Eugene, Ore.-based institution "was significantly undercapitalized, primarily due to nonperforming residential construction loans" and had no prospect of recovery because of the prolonged downturn in real estate markets -- especially in Central and Southern Oregon where its has a concentration of loans to developers.

A prompt corrective action was issued by the FDIC against LibertyBank on May 14, while an FDIC cease-and-desist order was issued on Dec. 23, 2009.

LibertyBank was the 108th FDIC-insured institution to fail during 2010.

Over in Fort Collins, Colo., the Colorado Division of Financial Services Thursday forced Norbel Credit Union into liquidation. The National Credit Union Administration was appointed liquidating agent, and Security Service Federal Credit Union purchase and assumed the failed institution's assets, liabilities and members. Norbel had around $120 million in assets and 16,098 members.

The next day, the NCUA assumed control of operations at Family First Federal Credit Union. As conservator, the regulator plans to keep the operation running. The Orem, Utah-based credit union has 19,476 members and $140 million in assets. A declining financial condition was cited by the NCUA.

"The credit union is not adequately capitalized under standards set
forth in the Federal Credit Act, and has earnings insufficient to enable it to continue under present management. The credit union's problems stemmed from problems in its loan portfolio," the NCUA stated. has tracked the failure of 13 credit unions so far this year. In all, the closing or failure of 134 mortgage-related operations have been reported during 2010.

July 31, 2010 Bank Failures
Bank Location Regulator Deposits (mil) Deposit prem. paid Assets (mil) Home Loans (mil) CRE Loans (mil) C&D (mil) Year Founded # Emp Acquirer FDIC Loss-Share Amount (mil) Deposit Ins. Fund Losses (mil)
Bayside Savings Bank St. Joe, Fla. OTS $52 million 0.00% $66 million $23 million $23 million $13 million 2003 16 Centennial Bank $48 million $16 million
Coastal Community Bank Panama City Beach, Fla. Florida Office of Financial Regulation $363 million 0.00% $373 million $87 million $85 million $88 million 1906 107 Centennial Bank $303 million $95 million
The Cowlitz Bank Longview, Wash. Washington Department of Financial Institutions $514 million 1.00% $529 million $36 million $189 million $32 million 1978 110 Heritage Bank $161 million $69 million
LibertyBank Eugene, Ore. Oregon Division of Finance and Corporate Securities $719 million 1.00% $768 million $39 million $361 million $60 million 1978 213 Home Federal Bank $300 million $115 million
NorthWest Bank and Trust Acworth, Ga. Georgia Department of Banking and Finance $159 million 0.00% $168 million $9 million $60 million $25 million 2004 25 State Bank and Trust Co. $108 million $40 million

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