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



Huge Losses for Small Failed Bank

Recent bank and credit union failures

Dec. 16, 2012

By Mortgage Daily staff


Losses from the failure of small Missouri bank are expected to reach nearly a quarter of the bank's assets. Two other small financial institutions also failed recently. The number of mortgage-related businesses that will have closed by the time the year finishes will be lower than any year since the mortgage crisis erupted.

On Friday, the Missouri Division of Finance said it took possession of Community Bank of the Ozarks.

The bank was founded in 1988 and had a staff of just 18 employees as of Sept. 30.

The Sunrise Beach, Mo., bank failed at its attempts to find a buyer or increase its capital, so its board of directors voted to turn the bank over to the state banking regulator.

"The demise of this bank is the result of liberal lending practices compounded by adverse economic trends," Missouri Commissioner of the Division of Finance Richard J. Weaver said in a statement. "Many of these loans became delinquent and non-performing. Losses have been realized and are more than the bank can support."

Weaver noted that Community Bank has been operating under close regulatory scrutiny since 2009.

The Federal Deposit Insurance Corp. was appointed receiver or Community Bank.

Through a covert bidding process, Bank of Sullivan won its bid to acquire all of the failed bank's $43 million in total assets and assume its $42 million in deposits. The deal calls for the FDIC to share in losses on $37 million of the assets -- which included $8 million in residential loans, $14 million in commercial mortgages and $1 million in construction-and-land-development assets.

Relative to Community Bank's asset size, expected losses are huge.

The FDIC projected that its Deposit Insurance Fund will be depleted by $10 million as a result of the demise of Community Bank -- the 51st federally insured bank failure in 2012.

Following a determination that G.I.C. Federal Credit Union was insolvent and had no prospect for restoring viable operations, the National Credit Union Administration said on Dec. 13 that it liquidated the Euclid, Ohio, institution. G.I.C., a multiple common bond credit union, served 3,476 members of several select groups. It had nearly $16 million in assets.

Last month, the Vermont Department of Financial Regulation closed the Border Lodge Credit Union. The NCUA was appointed liquidating agent of the Derby Line, Vt.-based credit union, which had just $3 million in assets and 1,097 members.

Mortgage Daily has tracked the demise of 14 credit unions so far this year.

Including non-bank entities, banks and credit unions -- 80 mortgage-related operations have closed or gone out of business in 2012 based on data tracked by Mortgage Daily.

Total annual casualties on are pace to be lower than in any year since the 31 in 2006 -- before the 2007 U.S. subprime mortgage crisis claimed 167 organizations and the 2008 global financial crisis claimed another126. Mortgage-related casualties peaked at 234 in 2009.

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