Billion Dollar Bank Goes Bust - Recent mortgage-related businesses to close or fail | Oct. 22, 2011

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

Billion Dollar Bank Goes Bust

Recent mortgage-related businesses to close or fail

Oct. 22, 2011

By MortgageDaily.com staff

A quartet of banks met their ends on Friday. But the one that stood out had $1.4 billion in assets and is expected to generate more than $200 million in losses. A reverse lender, meanwhile, has reportedly scaled back its wholesale and correspondent offerings.

The first bank to go was in Clearwater, Fla., where the Florida Office of Financial Regulation closed down Old Harbor Bank and, as was the case with all of Friday's bank failures, handed it over to the Federal Deposit Insurance Corp. as receiver.

Old Harbor had an excessively slim capital margin, with $218 million in assets and $216 million in deposits. The 48-employee institution was hit with an FDIC cease-and-desist order in September 2010.

The Superior Court of DeKalb County in Georgia issued an order authorizing the Georgia Department of Banking and Finance to take possession of Decatur First Bank. The seizure was made "pursuant to the Official Code of Georgia, Section 7-1-150(a)," which gives the state the power to take over an institution if it "is either insolvent or operating in an unsafe or unsound condition to transact its business, is operating in violation of any court order, statute, rule or regulation, or requests the department to take possession of its business and property."

An FDIC cease-and-desist order was issued against Decatur First in December 2009.

The Georgia banking department was at it a second time Friday, taking over Community Capital Bank. The Jonesboro bank had been hit with an FDIC cease-and-desist order in April 2009.

While Community Capital had less in assets than the two prior bank failures, its $62 million in estimated costs to the Deposit Insurance Fund was far more than Decatur's $33 million or Old Harbor's $39 million.

But the estimated losses from all three of the failed banks paled in comparison to the $225 million hit expected to be taken from the failure of Community Banks of Colorado.

After determining that the bank had been critically undercapitalized, the Federal Reserve Board was required within 90 days by the Prompt Corrective Action statute to reduce long-term loss to the FDIC's Deposit Insurance Fund. The Fed issued a prompt corrective action against Community Banks of Colorado in February and entered a formal agreement with the bank in March 2009.

The Greenwood, Colo.-based institution had $1.4 billion in assets including $180 million in residential loans, $276 million in commercial real estate loans and $233 million in construction-and-land-development loans.

Community Banks of Colorado was the 84th FDIC-insured failure this year.

A spokesman declined to confirm if Genworth Financial Home Equity Access has suspended a range of reverse mortgage products for its wholesale and correspondent channels.

"We won't make any comment on this right now," Genworth's public relations director, Alfred L. King, said in a written statement.

Genworth has closed 2,822 government-insured home-equity conversion mortgages through the third-party channels during the 12 months ended Aug. 31, according to data tracked by MortgageDaily.com.

Genworth reportedly sent its third-party originator clients an e-mail on Wednesday indicating that it was temporarily eliminating a range of reverse mortgage products offered through its wholesale and correspondent channels, Reverse Mortgage Daily reported.

Oct. 21, 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

Community Banks of Colorado

Greenwood, Colorado

Federal Reserve System

$1,330 million

$1,380 million

$180 million

$276 million

$233 million

1973

279

Bank Midwest, National Association

$714.2 million

$224.9 million

Community Capital Bank

Jonesboro, Georgia

Georgia Department of Banking and Finance

$166 million

$181 million

$39 million

$52 million

$42 million

2002

State Bank and Trust Co.

$141 million

$62 million

Decatur First Bank

Decatur, Georgia

Georgia Department of Banking and Finance

$179 million

$192 million

$23 million

$40 million

$26 million

1997

Fidelity Bank

$112 million

$33 million

Old Harbor Bank

Clearwater, Florida

Florida Office of Financial Regulation

$218 million

$216 million

$23 million

$91 million

$27 million

2003

1st United Bank

$156 million

$39 million

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