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

Brutal Week As 6 Firms Finished

Recent mortgage-related businesses to close or fail

Oct. 17, 2011

By staff

Four banks with assets of between $161 million and $204 million each failed Friday, and related losses will range from $38 million to $72 million each. The smallest of the banks had the most employees, while one of the firms had a big concentration in commercial mortgages. Recent non-bank casualties include an operation that securitizes commercial real estate loans and an appraisal management company.

In Gray, Ga., the Georgia Department of Banking and Finance took possession of Piedmont Community Bank. An order issued by the Superior Court of Jones County pursuant to the Official Code of Georgia, Section 7-1-150(a), appointed the Federal Deposit Insurance Corp. as receiver.

Piedmont opened for business in July 2002. As of June 30, the company employed 24 people. It was hit with an FDIC cease-and-desist order in November 2009.

State Bank and Trust Co. acquired all of Piedmont's $202 million in assets, though the FDIC agreed to share in losses on $163 million of the assets. The estimated loss to the Deposit Insurance Fund is $72 million -- the most of any of Friday's failures.

The North Carolina Commissioner of Banks closed down Blue Ridge Savings Bank Inc. and handed it over to the FDIC as receiver. Though it had less in assets than Piedmont, Blue Ridge had 41 employees. The 33-year-old bank faced an FDIC prompt corrective action in May 2010, while an FDIC cease-and-desist order against it was modified in January 2010. The cease-and-desist order was originally issued in November 2009.

"It is unfortunate that another state-chartered bank has closed," said North Carolina's banking commissioner, Joseph A. Smith Jr., in the announcement.

The action then moved to the Northeast, where the New Jersey Department of Banking and Insurance closed First State Bank. More than $90 million of the bank's 204 million in assets were tied up in commercial real estate loans.

The FDIC issued a cease-and-desist order against Cranford, N.J.-based First State in October 2009.

"Unfortunately, First State's poor asset quality made today's action necessary to protect consumers," New Jersey Department of Banking and Insurance Commissioner Tom Considine said in a statement.

After that, the Illinois Department of Financial and Professional Regulation – Division of Banking seized Country Bank and named the FDIC receiver. The FDIC was only able to sell $113 million of the Aledo, Ill.-based bank's $191 million in total assets, leaving estimated losses around $66 million.

Country Bank faced an FDIC cease-and-desist order in February.

Country Bank was the 80th FDIC-insured bank to fail this year.

A report this month from the FDIC indicated that $19 billion in Deposit Insurance Fund costs are expected for bank failures that will occur from 2011 through 2015. During just 2010, estimate losses to the fund reached $23 billion. The fund moved into positive territory in the second quarter following seven consecutive quarters of negative balances.

The nation's bankers weighed in on the fund's performance.

"The FDIC's update on the recapitalization of the Deposit Insurance Fund reaffirms the fact that the banking industry is rapidly returning to health and the losses once expected were overstated," a news release from the American Bankers Association stated. "The FDIC had set aside $17.7 billion for possible bank failures losses at the start of 2011, twice what the actual losses are likely to be this year."

Credit Suisse Group plans to shut down its 50-employee commercial-mortgage-backed securities division, the Wall Street Journal reported citing people familiar with the matter. The unit restarted business last year and has since originated around $1 billion in commercial mortgages, but none of the loans have been securitized.

Multiple sources have reported that AppraiserLoft has ended operations and its founder has stepped down -- leaving it with many unpaid bills.

The San Diego-based AMC touted "coast to coast coverage." Earlier this year, it was marketing ValueClear, an alternative to automated valuation models at a fraction of the cost.

Oct. 17, 2011, Bank Failures
Bank Location Regulator Deposits Deposit prem. paid Assets Home Loans CRE Loans C&D Year Founded # Emp Acquirer FDIC Loss-Share Amount Deposit Ins. Fund Losses
Blue Ridge Savings Bank Inc. Asheville, North Carolina North Carolina Office of Commissioner of Banks $159 million na $161 million $43 million $33 million $25 million 1978 41 Bank of North Carolina $143 million $38 million
Country Bank Aledo, Illinois Illinois Department of Financial and Professional Regulation – Division of Banking $168 million na $191 million $4 million $39 million $32 million 2000 32 Blackhawk Bank & Trust na $66 million
First State Bank Cranford, New Jersey New Jersey Department of Banking and Insurance $201 million na $204 million $35 million $91 million $6 million 2006 25 Northfield Bank na $46 million
Piedmont Community Bank Gray, Georgia Georgia Department of Banking and Finance $181 million na $202 million $27 million $46 million $46 million 2002 24 State Bank and Trust Co. $163 million $72 million

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