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

2 of 3 Bank Failures Friday in Florida

Recent financial institutions to fail

Oct. 20, 2012

By Mortgage Daily staff

Three bank failures on Friday included two Florida financial institutions and one in Missouri. Nearly $90 million in losses are projected for the latest round of casualties. Despite the elevated weekly activity, this year's bank failures still stand at just half the number that didn't make it through 2011. Meanwhile, a decline was reported in the number of troubled credit unions.

The first bank to go was GulfSouth Private Bank, which was closed Friday by the Florida Office of Financial Regulation.

The Destin, Fla., bank and its four branches employed around 27 people.

As is the case with all federally insured banks that fail, the Federal Deposit Insurance Corp. was named receiver of GulfSouth. Following a secret bidding process, SmartBank agreed to acquire all of the six-year-old bank's assets, which totaled $159 million as of June 30 and included $41 million in residential loans, $20 million in commercial real estate loans and $34 million in construction-and-development loans. SmartBank also assumed all of the bank's $151 million in total deposits.

The FDIC, which issued a consent order against GulfSouth in June 2010, estimated that its Deposit Insurance Fund will be depleted by $36 million in order to cover losses resulting from the failure.

Next, the Office of the Comptroller of the Currency closed down First East Side Savings Bank.

"The OCC acted after finding that the institution had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices," an announcement from the regulator stated. "The OCC also found that the institution incurred losses that depleted its capital, the institution is critically undercapitalized, and there is no reasonable prospect that the institution will become adequately capitalized."

The Tamarac, Fla., bank was established in 1920. Headcount at the time of its demise stood at just 12 employees. More than $35 million of its assets were tied up in home loans, while CRE loans accounted for another $5 million. A cease-and-desist order was issued against the bank in May 2010 by the now-defunct Office of Thrift Supervision.

The winning bid for First East Side came from Stearns Bank, N.A., which acquired all of its $67 million in assets and assumed all of its $66 million in deposits.

Losses from First East Side's failure are pegged at just $9 million.

Friday's final and most costly failure was Excel Bank, which was shuttered by the Missouri Division of Finance. The state noted that the bank had no luck with attempts to sell itself or find additional capital, leading the board of directors to vote to turn over the bank to regulators.

"The demise of this bank is the result of aggressive lending in commercial real estate development projects which proved unsuccessful," the finance division said in a statement. "Many of these loans became delinquent and non-performing. Losses have been realized and are more than the bank can support. The bank has operated under close regulatory scrutiny since 2009."

Excel was established in 1964, and its staff size was 46 employees. Included in its investment portfolio were $47 million in residential mortgages, $56 million in commercial mortgages and $15 million in C&D assets. The FDIC issued a $12,000 civil money penalty against the bank in February 2011 and a cease-and-desist order in March 2010.

Simmons First National Bank was the winning bidder and picked up all of Excel's $201 million in assets with the FDIC agreeing to share losses on $127 million of the assets. Simmons also assumed all of the $187 in deposits.

The FDIC expects to lose $41 million as a result of Excel's failure -- the 46th FDIC-insured bank failure this year.

With less than three months remaining in 2012, this year's bank failures are on track to come in well below the 92 bank failures for all of 2011.

Mortgage Daily has tracked 72 mortgage-related entities that have either failed or been closed down so far during 2012.

Trinidad, Colo.-based Trinity Credit Union, which was placed into conservatorship by the Colorado Division of Financial Services in July, was merged with Power Credit Union, according to an Oct. 1 announcement from the National Credit Union Administration.

On Thursday, the NCUA reported that the National Credit Union Share Insurance Fund and the Temporary Corporate Credit Union Stabilization Fund have stabilized as the number of troubled credit unions has fallen.

"The steady decline in the number of troubled credit unions and the continued improvements in the performance of the NCUSIF are a direct result of a recovering economy, the prudent actions of credit unions, and careful supervision by NCUA and state regulators," NCUA Board Chairman Debbie Matz said in the announcement "Significantly, the percentage of assets in CAMEL code 3, 4 and 5 credit unions dropped to the lowest levels since 2008."

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