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

The Graveyard Journal

Recent bank failures and lender closings

Dec. 14, 2009

By staff

More than $150 million in government insurance losses are expected from three bank failures Friday. A California company said it abandoned plans to operate as a smaller firm and has ended operations altogether, while a Hawaii-based bank disclosed plans to shutter its California lending operations.

The Office of the Comptroller of the Currency announced that it closed down Republic Federal Bank, N.A., on Friday and handed the Miami-based institution over to the Federal Deposit Insurance Corporation as receiver -- as is done with all federally insured failed banks.

The OCC, which entered a formal agreement with the 30-year-old bank last year, said it acted only after determining that the bank had experienced substantial dissipation of assets and earnings because of unsafe and unsound practices.

"The OCC also found that 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," the statement said.

All of 90-employee Republic's $353 million in deposits as of Sept. 30 were assumed by 1st United Bank for a 1.2 percent premium. United also acquired $267 million of Republic's $433 million in assets -- which included $225 million in home loans, $69 million in commercial mortgages and a handful of construction-and-land-development loans. With the FDIC sharing in losses on $210 million of the assets, the associated cost to the Deposit Insurance Fund is estimated at $123 million.

The OCC also seized three-year-old Valley Capital Bank, N.A., Friday -- citing the same reasons used for Republic's failure. The OCC issued a cease-and-desist order against Valley in 2008. Enterprise Bank & Trust assumed the Mesa, Ariz., institution's $41 million in deposits as of Sept. 30 for a 2 percent premium and acquired all of its $40 million in assets including $4 million in residential loans, $10 million in commercial mortgages and $6 million in construction-and-land-development loans. The FDIC agreed to a $30 million loss-sharing agreement, pushing estimated losses from 20-employee Valley to $7 million.

SolutionsBank was seized by the Office of the State Bank Commissioner of Kansas. The Overland Park, Kan., bank's $421 million in deposits were assumed at par by Arvest Bank -- which also acquired the failed institution's $511 million in assets, including $20 million in one- to four-unit loans, $144 million in commercial real estate loans and $118 million in construction-and-land-development assets.

SolutionsBank, which employed 78 people, was originally founded in 1881. It entered a formal agreement with the Federal Reserve Bank of Kansas City and Kansas' Office of the State Bank Commissioner early last year. On Oct. 23, the Federal Reserve Board issued a prompt corrective action against SolutionsBank.

With a $411 million loss-sharing arrangement, the FDIC expects its Deposit Insurance Fund to take a $122 million hit as a result of SolutioinsBank's failure -- the 133rd FDIC-insured failure so far this year.

Ron Temko, chief executive officer of Windsor Capital Mortgage Corp., confirmed in a phone call to that the California-based company has abandoned plans to operate as a slimmed-down boutique business and has ceased operations.

"We're just winding things down," Temko said. "We're essentially out of business."

Honolulu-based Central Pacific Bank announced Wednesday that it would exit the West Coast market and wind down its California loan operations. Around 18 staff members will be impacted by the closing, which is expected to be complete by 2012.

The bank, parent of Central Pacific Home Loans, noted that it has not originated California loans in 18 months and has been in runoff mode. Loans and leases outstanding fell 15 percent -- or $622 million -- in the third quarter, with much of the reduction coming from its California assets. Mainland construction and commercial real estate loans ended September at $866 billion. has tracked the closing of 218 mortgage-related operations so far during 2009.

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