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

3 Banks Fail, 1 Ends Originations

Ocala National Bank, Suburban Federal Savings & MagnetBank close down

February 2, 2009

By staff

As bank regulators shut down three more banks, one struggling institution has shut down its mortgage lending operations.

The Office of the Comptroller of the Currency closed Ocala National Bank on Friday, a press release said. The Federal Deposit Insurance Corporation was named receiver of the Ocala, Fla.-based bank.

CenterState Bank of Florida acquired $205 million of Ocala's deposits for a 1.7 percent premium. Another $17 million in brokered deposits were not part of the deal. CenterState also acquired $24 million of Ocala's $224 million in assets as of Dec. 31. Ocala held $107 million in residential loans as of Sept. 30, while construction and land development loan holdings were $72 million.

The FDIC expects to lose $100 million from the failure of the 48-employee institution.

Also on Friday, the Office of Thrift Supervision shut down Suburban Federal Savings Bank in Crofton Md. Bank of Essex agreed to acquire Suburban's $302 million in deposits as of Sept. 30, 2008.

Bank of Essex also agreed to purchased $348 million of Suburban's $360 million in assets at a $45 million discount. Suburban's residential loan holdings were $225 million on Sept. 30, 2008, while construction and land development loans owned were $72 million. FDIC, which was named receiver, projects a $126 million hit to the Deposit Insurance Fund from the failure of the 60-employee company.

OTS explained in its own statement that the 53-year-old firm launched an aggressive lending program in 2005 that led to an increase in problem assets during 2007 and a string of quarterly losses beginning in late 2007. A February 2007 examination resulted in an OTS troubled-condition letter, while a cease-and-desist order was triggered by an August 2007 field visit.

A third bank, MagnetBank, was closed by the Utah Department of Financial Institutions on Friday, an FDIC press release said. A buyer could not be found for MagnetBank's banking operations and $283 million in deposits, so the FDIC has approved insured deposit payouts for depositors of the Salt Lake City-based bank.

The 21-employee institution had assets of $293 million in assets as of Dec. 2, while construction and land development loans were $213 million as of Sept. 30, 2008, and commercial mortgage holdings were $21 million.

In all, six federally insured banks have failed so far this year.

Another federally insured bank, First Federal Bank of California, has posted a notice on its Web site that it has halted the origination of residential loans, home-equity lines-of-credit and commercial loans. Just last week, parent FirstFed Financial Corp. disclosed that OTS has issued cease-and-desist orders against the Los Angeles-based institution.

In last week's disclosure, FirstFed said 62 primarily mortgage employees would be laid off.

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