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

5 Financial Institutions Fail Friday

FDIC reports five closings

August 3, 2009

By staff

Five federally insured financial institutions failed on Friday. Losses to the bank insurance fund are expected to exceed $900 million.

In each of the failures, the Federal Deposit Insurance Corporation was named receiver.

The closings started with First State Bank of Altus, which was closed by the Oklahoma State Banking Department. The 100-year-old bank employed 44 people at the end of March.

Amarillo, Texas-based Herring Bank agreed to assume all of the Altus, Okla., bank's $98 million in deposits. Herring also agreed to acquire $64 million of the failed bank's $103 million in assets -- which included $14 million in loans secured by one- to four-unit residential properties, $19 million in commercial mortgages and $19 million in construction-and-land-development loans.

The FDIC, which issued a cease-and-desist order against First State Bank of Altus on Jan. 16, estimated the cost to clean up the mess from its failure at $25 million.

Next was Integrity Bank in Jupiter, Fla., which was closed by the Florida Office of Financial Regulation.

The FDIC expects to lose $46 million on the closing of five-year-old Integrity, which had just 16 employees as of March 31.

Stonegate Bank agreed to assume all of Integrity's $102 million in deposits for an 0.20 percent premium. Stonegate also purchased around $52 million of the failed bank's $119 million in assets, including $10 million in home loans, $32 million in commercial and multifamily loans and $42 million in construction-and-development loans.

Peoples Community Bank, founded in 1889, was closed by the Office of Thrift Supervision. First Financial Bank, National Association, assumed all of the 151-employee bank's $598 million in deposits for a 1.5 percent premium and acquired almost all of People's $706 million in assets. As of March 31, assets included $265 million in residential loans, $106 million in commercial mortgages and $81 million in construction-and-land-development loans.

The FDIC is sharing in losses on $658 million of the assets, and it expects the failure of the West Chester, Ohio, institution to cost the Deposit Insurance Fund $130 million.

The New Jersey Department of Banking and Insurance shut down First BankAmericano. The seizure followed June cease-and-desist orders issued by both the state and the FDIC against the 12-year-old institution.

"First BankAmericano's management and board worked closely with regulators and tried to address issues raised through two separate cease and desist orders," New Jersey Department of Banking and Insurance Commissioner Neil N. Jasey said in the statement. "Unfortunately, the bank's poor asset quality, despite attempted and well coordinated corrective actions, made today's action necessary."

Crown Bank assumed all of the Elizabeth, N.J., bank's $157 million in deposits and acquired all of its $166 million in assets -- including home mortgages of $5 million, $62 million in commercial mortgages and $24 million in construction-and-land-development loans.

FDIC losses from the failure of 51-employee First BankAmericano were estimated at $15 million.

The fifth FDIC-insured institution to close Friday -- and the 69th this year -- was Mutual Bank, which was seized by the Illinois Department of Financial Professional Regulation - Division of Banking. The bank was established in 1962 and employed 173 people as of the end of March.

All $1.6 billion in deposits of the failed bank were assumed by United Central Bank in Garland, Texas. In addition, United Central acquired all of the Harvey, Ill., bank's $1.6 billion in assets, with the FDIC sharing in losses on $1.3 billion of the assets. As of March 31, residential holdings were $62 billion, while commercial mortgage assets were $940 million and construction-and-land-development loans were $295 million.

The FDIC, which issued a $6,500 civil money penalty against Mutual Bank on March 17 and a $26,250 penalty prior to that, pegged losses from Mutual Bank at $696 million. has tracked the closing of 120 mortgage-related operations so far this year.

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