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

$350 Million in Losses from Friday's 7 Bank Failures

5 more banks closed Friday; 2009 count at 106

Oct. 26, 2009

By staff

Seven bank failures Friday are expected to deplete the Deposit Insurance Fund by more than $350 million. Three of the banks were in Florida.

On Friday, reported on the failure of Naples, Fla.-based Partners Bank and American United Bank in Lawrenceville, Ga. Estimated costs for the two banks' failures were $73 million.

After that story was published, 23-employee Hillcrest Bank Florida in Naples, Fla., was closed by the Florida Office of Financial Regulation and handed over to the Federal Deposit Insurance Corporation as receiver. Stonegate Bank agreed to assume all of Hillcrest's $84 million in deposits as of Oct. 1 for an 0.50 percent premium and acquire $28 million of its $83 million in assets -- including $4 million in one- to four-unit property loans, $19 million in commercial mortgages and $50 million in construction-and-land-development loans.

The projected loss from the failure of three-year-old Hillcrest -- the 102nd FDIC-insured bank to fail this year -- was pegged at $45 million.

Next was Flagship National Bank in Bradenton, Fla., which was closed by the Office of the Comptroller of the Currency. The FDIC, which is appointed receiver of all federally insured banks that fail, sold all of Flagship's $190 million in assets as of Aug. 31 to First Federal Bank of Florida with the FDIC sharing in losses on $130 million. In addition, First Federal assumed $175 million in deposits at par.

"The bank had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices," the OCC stated. "The bank incurred losses that depleted its capital, the bank is critically undercapitalized, and there is no reasonable prospect that the bank will become adequately capitalized without Federal assistance."

Flagship entered a formal agreement with OCC last year. The FDIC expects losses of $59 million from Flagship's failure.

Following Flagship was Racine, Wis.'s, Bank of Elmwood, which was seized by the Wisconsin Department of Financial Institutions. Its $237 million in deposits as of Sept. 30 were assumed at par by Tri City National Bank, which also acquired all of the failed bank's $327 million in assets.

The FDIC expects this one to cost $101 million.

Over in Otsego, Minn., the Minnesota Department of Commerce closed Riverview Community Bank. Central Bank assumed all of Riverview's $80 million in deposits as of Aug. 31 at par and acquired all of Riverview's $108 million in assets.

Riverview had previously dubbed itself, "The Christian Bank," with prospective borrowers regularly praying with originators. In May 2005, the bank absorbed American Pacific Bank, which had been acquired by parent Riverview Bancorp. But it faced an FDIC cease-and-desist order last April.

The FDIC, which agreed to share in losses on $75 million in assets, projected that Riverview's failure will cost the Deposit Insurance Fund $20 million.

The last to go Friday was First Dupage Bank, which was closed by the Illinois Department of Financial & Professional Regulation - Division of Banking. The Westmont, Ill., institution had $279 million in assets, all acquired by First Midwest Bank with the FDIC sharing in losses on $247 million of the assets. All of First Dupage's $254 million in deposits were assumed by First Midwest for an 0.75 percent premium.

The FDIC, which issued a cease-and-desist order against First Dupage in June, estimated it will cost $59 million for the failure of First Dupage -- the 106th FDIC-insured bank to fail this year. has tracked the failure or closing of 175 mortgage-related businesses so far this year.

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