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|First Bank Failure of 2014 Was Over 100 Years Old
Recent mortgage-related closings and failures
Jan. 20, 2014
By Mortgage Daily staff
|The first bank failure of this year was a financial institution that was more than a century old. Meanwhile, Citigroup Inc.'s mortgage subsidiary is battling the former owner of a previously failed firm.
On Friday, the Office of the Comptroller of the Currency reported that it closed down DuPage National Bank.
The federal banking regulator said that it determined that the West Chicago, Ill., bank had experienced substantial dissipation of assets and earnings due to 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," the statement said.
DuPage was founded in 1891 and had just 26 employees at the time of its demise. It owned $10 million in residential loans, $16 million in commercial real estate loans and less than $1 million in construction-and-land-development loans.
The bank entered a formal agreement with the OCC in May 2009 and was hit with an OCC cease-and-desist order in November 2011.
The OCC appointed the Federal Deposit Insurance as receiver.
In turn, the FDIC held a secret bidding process and awarded the winning bid to Republic Bank of Chicago -- which assumed all of the failed bank's $60 million in deposits for a 1.20 percent premium and acquired all of its $62 million in assets.
The estimated cost to the Deposit Insurance Fund for DuPage's failure -- the first of 2014 -- is less than $2 million.
A mixed ruling was handed in December by the U.S. District Court for the Eastern District of Missouri in a lawsuit filed by CitiMortgage Inc. against Just Mortgage Inc.
After a final judgment was entered in March 2013 in favor of Citi for $8,806,276, Citi filed a supplemental complaint adding Chang Hwan Choi, Eun. H. Choi and RMK Financial Inc. as defendants.
Just Mortgage closed down in 2011 and was unable to pay the judgment. But Citi claims the company was still profitable up until its closing, and its owners just moved the business and assets over to RMK.
Motions made by Citi were sustained in part and denied in part in the latest ruling.
CITIMORTGAGE, INC., Plaintiff, v. JUST MORTGAGE, INC., CHANG HWAN CHOI, EUN H. CHOI, and RMK FINANCIAL, INC., Defendants.
Case No. NO. 4:09 CV 1909 DDN; complaint filed Nov. 20, 2009; ruling on Dec. 13, 2013 (U.S. District Court for the Eastern District of Missouri).
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