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

Death of 2 Banks to Cost Over $60 Million

Nebraska, Utah banks fail Friday

Nov. 6, 2011

By staff

Two banks failed Friday. While one had less than double the assets of the other -- related losses for the bigger bank are expected to be nearly four times as much.

The Nebraska Department of Banking and Finance closed down Mid City Bank Inc. on Friday. It was the first bank in Nebraska to be shuttered in more than a year.

"The failure of Mid City Bank Inc. resulted primarily from large commercial real estate loan losses and poor management practices which led to a deterioration of the bank's capital," Nebraska Department of Banking and Finance Director John Munn explained in an announcement. "When the capital was not replenished, the department was left with no option but to place the insolvent institution in receivership."

The Omaha, Neb.-based bank was established in 1965 and employed 46 people. It had $106 million in total deposits and $106 million in total assets including $7 million in home loans and $14 million in commercial mortgages.

A cease-and-desist order was issued against Mid City in November 2009 by the Federal Deposit Insurance Corp., which was named receiver by the state.

Purdum State Bank, which acquired the assets and deposits of the failed financial institution, has changed its own name in conjunction with the acquisition, and the combined organization reopened Saturday as Premier Bank.

The associated loss to the Deposit Insurance Fund from the failure of Mid City is projected to be $13 million.

Also on Friday, the Utah Department of Financial Institutions seized SunFirst Bank and handed it over to the FDIC as receiver. The bank was a decade old.

SunFirst had 41 employees, $169 million in deposits and $198 million in total assets including residential mortgages of $28 million, $45 million in commercial mortgages and $32 million in construction-and-land-development loans.

SunFirst was hit with an FDIC Prompt Corrective Action Directive in July. It also faced an FDIC cease-and-desist order in November 2010 and another in October 2009. The bank entered a formal agreement with the Federal Reserve Bank of San Francisco in February 2010.

The winning bid to take over SunFirst came from Cache Valley Bank, which assumed $155 million of SunFirst's deposits and picked up $177 million of its assets with the FDIC agreeing to a loss-share arrangement on $130 million of the assets. After all is said and done, the FDIC predicts related losses will total $50 million.

SunFirst was the 87th FDIC-insured bank to fail so far this year. Including both of Friday's failures, Mortgage Daily has tracked the closing or failure of 121 mortgage-related entities during 2011.

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