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

125-Year-Old PA Bank Fails

NOVA Bank to be liquidated

Oct. 28, 2012

By Mortgage Daily staff

After two years of operating under regulatory orders, a Pennsylvania bank that was established in the 1800's has failed and will be liquidated. Nearly $0.1 billion in losses are projected from the bank's demise.

NOVA Bank was founded in 1887.

As of June 30, the 107-employee bank had $432 million in total deposits and $483 million in total assets -- including $88 million in residential loans, $143 million in commercial mortgages and $13 million in construction-and-land-development loans.

On Friday, the Pennsylvania Department of Banking and Securities seized control of NOVA, closed it down and appointed the Federal Deposit Insurance Corp. as receiver.

While the FDIC had conducted a secret bidding process to find another financial institution to take over the operations of the failed bank -- no buyers were found. So the FDIC approved the payout of NOVA's insured deposits. National Penn Bank has agreed to accept NOVA's direct deposits from the federal government, such as Social Security and Veterans' payments, until Jan. 25, 2013.

According to court documents in a federal lawsuit filed in December 2011 by Nova and its parent NOVA Financial Holdings Inc. against Bancinsure Inc., NOVA became aware in May 2010 that its chief lending officer, Thomas J. Patterson, and its business center manager, Beth Martin, misappropriated $690,938 in customer funds. The pair subsequently admitted to the criminal actions.

Prohibition orders were issued by the FDIC issued against bank executive Craig J. Scher in April 2010 and against Patterson in January 2012. In May 2010, the FDIC issued a cease-and-desist order against the Berwyn, Pa.-based company. NOVA and its parent entered a written agreement with the Federal Reserve Bank of Philadelphia in July 2010.

The Deposit Insurance Fund is expected to be depleted by $91 million as a result of NOVA's failure, the 47th FDIC-insured bank failure so far in 2012.

Including banks, credit unions and non-bank mortgage lenders -- Mortgage Daily has tracked 73 mortgage-related businesses that have closed or failed this year.

Nova Financial Holdings Inc., and Nova Bank, Plaintiffs, v. Bancinsure Inc., Defendant.
Case No. 11-07840, case filed Dec. 27, 2011, decision issued on April 17, 2012 (U.S. District Court for the Eastern District of Pennsylvania).

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