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

10 Go Down

7 banks, 2 mortgage firms and 1 credit union closed

Oct. 23, 2010

By staff

In addition to seven banks that failed on Friday, recent mortgage-related operations to close or collapse include a credit union, a wholesale mortgage lending unit and a company that gave mortgage brokers with no net worth the ability to operate as mortgage bankers.

The Florida Office of Financial Regulation Friday seized and shuttered First Bank of Jacksonville and Progress Bank of Florida. The Federal Deposit Insurance Corp. was named receiver of both failed institutions, as happens when any federally insured bank fails.

First Bank was hit with an FDIC cease-and-desist order on Nov. 10, 2009. Progress entered a formal agreement with the Federal Reserve Bank of Atlanta and Florida's Office of Financial Regulation on July 27. The Federal Reserve Bank of Kansas City had received an application earlier this year from Community Bank Investors of America LP and FA Capital LLC to acquire additional voting shares of Progress, for a total of 49.99 percent.

Losses from the demise of the two banks are expected to be under $50 million.

After that, the Office of the Comptroller of the Currency closed down Georgia's First National Bank of Barnesville, which was more than a century old, and First Suburban National Bank in Maywood, Ill. The OCC entered a formal agreement with First National Bank on June 9, 2009. The regulator issued a capital directive against First Suburban on Aug. 12, 2009, and entered a formal agreement with the bank in 2008.

"The OCC acted after finding that the bank had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices," the regulator said in separate announcements about the two banks. "The OCC also found that the bank incurred losses that depleted its capital, the bank is significantly undercapitalized, and there is no reasonable prospect that the bank will become adequately capitalized without federal assistance."

Also in Georgia, the state's Department of Banking and Finance closed The Gordon Bank. In May of last year, the bank faced an FDIC cease-and-desist order. The tiny institution's collapse is expected to cost the Deposit Insurance Fund less than $10 million.

Friday's biggest bank failure by far was in Overland Park, Kan., where the state's Office of the State Bank Commissioner closed Hillcrest Bank, which had $1.7 billion in assets. After sharing in losses on $1.2 billion of the company's assets, the FDIC expects to eat $330 million as a result of Hillcrest's failure.

The FDIC issued a cease-and-desist order against Hillcrest in October 2009, while it hit the bank with an $8,000 civil money penalty three months earlier. The Federal Reserve Bank of Kansas City entered a formal agreement with parent Hillcrest Bancshares Inc. in October 2009.

No adequate bid was received for First Arizona Savings, A FSB, so the bank was closed by the Office of Thrift Supervision -- which noted that the Scottsdale-based institution "was critically undercapitalized" -- and liquidated by the FDIC. A cease-and-desist order was issued by the OTS against First Arizona in November of last year.

Including First Arizona, the FDIC said 139 of the banks it insures have failed so far during 2010. At the same point last year -- 101 FDIC-insured institutions had failed.

Pampa, Texas-based Phil-Pet Federal Credit Union was thrown into liquidation by the National Credit Union Administration on Oct. 18. The decision to liquidate the $4 million credit union followed a determination that it was insolvent.

The 70-year-old credit union's 765 members will now be served by Pantex Federal Credit Union. Including Phil-Pet, the NCUA said 16 federally insured credit unions have been liquidated this year. A total of 19 credit union failures have been tracked by Mortgage Daily this year.

The wholesale lending division of Wintrust Mortgage Corp. stopped doing business on Oct. 15, according to an announcement from the company. Loans already registered or locked with the Schaumburg, Ill.-based lender need to be closed by Dec. 31.

"Wintrust Mortgage Corp. is exiting the wholesale business after many years of service to the mortgage brokerage community," the statement said. "
This is a business decision based on our need to better focus our assets and attention to the continued growth of our retail and correspondent channels."

Parent Wintrust Financial Corp. reported $1.5 billion in overall second-quarter 2009 fundings. Wintrust Mortgage Corp., which was previously known as WestAmerica Mortgage Co., picked up mortgage broker Revere Mortgage Ltd. in an acquisition last year and acquired Professional Mortgage Partners in December 2008.

In a 2007 interview with Mortgage Daily, WestAmerica President David Hrobon said the company employed around 290 employees in four regional wholesale offices and was looking at hiring as many as 175 employees -- including some from American Home Mortgage.

NorthStar Alliance Inc. recently stopped funding loans because it lost its warehouse line, National Mortgage News reported. NorthStar operates the NorthStar Branch Associates program, which promised to enable mortgage brokers to operate as mortgage bankers without any net worth requirements. Their Web site was dead as of Saturday.

From Jan. 1 through Oct. 23, Mortgage Daily has tracked the closing or collapse of 174 mortgage-related entities or operations.

Oct. 22, 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)
First Arizona Savings, A FSB Scottsdale, Arizona OTS $199 million na $272 million $162 million $8 million $5 million 1988 90 liquidated na $33 million
Hillcrest Bank Overland Park, Kansas Kansas Office of the State Bank Commissioner $1,540 million 0.00% $1,650 million $20 million $245 million $614 million 1975 184 Hillcrest Bank, National Association $1,150 million $330 million
First Suburban National Bank Maywood, Illinois OCC $140 million 0.00% $149 million $35 million $45 million $9 million 1943 41 Seaway Bank and Trust Co. $117 million $31 million
The Gordon Bank Gordon, Georgia Georgia Department of Banking and Finance $26 million 0.05% $29 million $11 million $0 million $0 million 1946 13 Morris Bank (acquired $12 million in assets) $0 million $9 million
The First National Bank of Barnesville Barnesville, Georgia OCC $127 million 0.00% $131 million $26 million $37 million $27 million 1902 35 United Bank $107 million $34 million
Progress Bank of Florida Tampa, Florida Florida Office of Financial Regulation $101 million 0.00% $111 million $25 million $26 million $25 million 1984 20 Bay Cities Bank $83 million $25 million
First Bank of Jacksonville Jacksonville, Florida Florida Office of Financial Regulation $77 million 0.00% $81 million $20 million $26 million $7 million 1989 22 Ameris Bank $60 million $16 million

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