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Georgia Bloodbath

Recent mortgage-related closings

Dec. 7, 2009

By MortgageDaily.com staff


Six financial institutions were seized Friday including three Georgia banks. Friday's failures are expected to cost the bank insurance fund more than $2 billion. In addition, non-bank closings last week included a credit union and a Massachusetts firm with 160 employees.

Friday's first bank failure was The Buckhead Community Bank, which was shut down by the Georgia Department of Banking and Finance and handed over to the Federal Deposit Insurance Corporation -- as is the case with all federally insured financial institutions that fail. State Bank and Trust Co. assumed all of the Atlanta-based institution's $838.0 million in deposits as of Nov. 6 at par and acquired all of Buckhead's $874 million in assets -- including $78 million in residential loans, $187 million in commercial mortgages and $292 million in construction-and-land-development loans.

The FDIC agreed to share in losses on around $692 million of the 11-year-old institution's assets, pushing the agency's estimated losses to $241 million as a result of 88-employee Buckhead's failure -- the 125th FDIC-insured bank failure this year.

Next, the Office of the Comptroller of the Currency closed First Security National Bank in Norcross, Ga. The OCC, which issued a cease-and-desist order against First Security last year, cited a "dissipation of assets and earnings due to unsafe and unsound practices" and noted that it was critically undercapitalized with no reasonable prospect of carrying on without federal assistance.

State Bank and Trust Co. assumed all of 24-year-old First Security's $123 million in deposits at par and acquired $118 million of the failed bank's $128 million in assets, including $12 million in home loans, $14 million in commercial real estate loans and $15 million in construction-and-land-development assets. With the FDIC's participation in losses on $82 million of the 24-employee bank's assets, the cost to the Deposit Insurance Fund is projected at $30 million.

The Georgia Department of Banking and Finance's second bank seizure was The Tattnall Bank, which was established in 1900. HeritageBank of the South agreed to assume all of the Reidsville, Ga., institution's $47 million in deposits as of Sept. 30 at par and acquire $49 million of the 20-employee institution's $50 million in assets that included $6 million in residential mortgages, $11 million in commercial mortgages and $4 million in construction-and-land-development financing. Associated losses to the insurance fund are estimated at $14 million.

The Federal Reserve Board reported in August that it had received an application from Heart of Georgia Bancshares Inc. to acquire 100 percent of the voting shares of The Tattnall BankCorp. The bank subsidiary faced an FDIC cease-and-desist order in January.

Aurora, Ill.-based Benchmark Bank, with 42 employees, was closed by the Illinois Department of Financial and Professional Regulation. Chicago's MB Financial Bank, N.A., assumed all of the 111-year-old bank's $181.0 million in deposits as of Nov. 16 at par and acquired all of its $170 million in assets -- including $20 million in home loans, $35 million in commercial mortgages and $36 million in construction-and-land-development loans. The FDIC, which issued an October cease-and-desist order against Benchmark and agreed to loss sharing on $139 million of the assets, projected a $64 million related hit to the Deposit Insurance Fund.

The Office of Thrift Supervision closed 122-year-old Greater Atlantic Bank in Reston, Va., noting that the 46-employee bank was "critically undercapitalized and in unsafe and unsound condition to transact business." Sonabank agreed to acquire all of the failed bank's $179 million in deposits at par and acquire all of its $203 million in assets, which included $96 million in residential loans, $35 million in commercial mortgages and $6 million in construction-and-land-development assets. The FDIC will share in losses on $145 million of the assets and expects to lose $35 million from the failure.

Greater Atlantic terminated the operations of Greater Atlantic Mortgage Corp. in March 2006.

Including the failure of AmTrust Bank, which was closed by the OTS, Friday's failures are projected to cost the Deposit Insurance Fund $2.384 billion. So far this year, 130 FDIC-insured financial institutions have failed.

On Nov. 30, the National Credit Union Administration announced it placed Fairfield County Ohio Federal Employees Federal Credit Union into liquidation. The institution had 747 members and $1.5 million in assets. Share account holders will received checks for their deposits. Fairfield was the 19th credit union failure tracked this year by MortgageDaily.com.

"NCUA made the decision to liquidate Fairfield County Ohio Federal Employees Federal Credit Union and discontinue its independent operations after determining that the credit union is insolvent," the statement said. "It has no prospects for restoring viable operations."

An announcement last week from Bank of Blue Valley indicated that Merrlin Mortgage Corp. President Charles E. Merritt III and most of his employees will join the bank after closing the Overland Park, Kan.-based firm last summer.

Seaview Financial, which faced regulatory action over tossing documents loaded with private customer data in a recycling dumpster, closed down in February, according to the Orange County Register. The Corona Del Mar, Calif., company was reportedly owned by Paul Henry Reed.

The Mortgage Lender Implode-O-Meter reported last week the closing of 160-employee Dynamic Capital Mortgage in Brookline, Mass.

So far this year, MortgageDaily.com has tracked the closing of 214 U.S. mortgage-related firms.

In Vancouver, British Columbia, Abode Mortgage Holdings Corp. announced last week the closing of its mortgage origination business, Abode Mortgage Corp. The move followed a failed sale of the unit.

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