Mortgage Daily Logo

Four Failed Financial Institutions

Mortgage News

Four financial institutions in three states fell last week as the Great Recession proved too much for them. Between them, the institutions had around a half billion dollars in assets.

In Roswell, Ga., the state’s Department of Banking and Finance took possession of American Trust Bank and, with an order in hand from the Superior Court of Oconee County, appointed the Federal Deposit Insurance Corp. as receiver.

The state was authorized to make the seizure under the Official Code of Georgia, Section 7-1-150(a), which authorizes such a move when a financial institution is “insolvent or operating in an unsafe or unsound condition to transact its business, is operating in violation of any court order, statute, rule or regulation, or requests the department to take possession of its business and property.”

American Trust, founded in 2003, employed 29 people. Its $238 million in assets included $13 million in one- to four-unit residential loans, $80 million in commercial real estate assets and $41 million in construction-and-development loans. The FDIC issued a cease-and-desist order against the bank in October 2009.

Renasant Bank agreed to acquire $147 million of the failed bank’s assets with the FDIC sharing in losses on $94 million of the assets. It also assumed all of American Trust’s $222 million in deposits. The FDIC projects $72 million in costs to its Deposit Insurance Fund as a result of American Trust’s closure.

After that, the state seized North Georgia Bank.

The Watkinsville, Ga.-based company was established in 2000. As of Sept. 30, employee count stood at 27. Residential holdings were $39 million, commercial mortgage assets were $35 million and C&D loans on the balance sheet were $31 million.

The FDIC selected BankSouth as the winning bidder. BankSouth acquired around $124 million of the bank’s $153 million in assets with the FDIC sharing in losses on $120 million of the assets. BankSouth also assumed most of its $140 million in deposits.

The FDIC’s projected losses for North Georgia are $35 million.

Last week’s final bank failure was Community First Bank – Chicago, which was closed down by the Illinois Department of Financial and Professional Regulation.

The bank was just five years old and had only 13 employees. Its residential holdings were $12 million, while commercial mortgages were $15 million and C&D assets were $7 million. In February 2010, Community First entered a formal agreement with the Federal Reserve Bank of Chicago.

The Chicago-based institution had just $51 million in assets, all which were acquired by Northbrook Bank and Trust Co. The FDIC agreed to a $43 million loss-sharing arrangement and expects related losses to reach nearly $12 million. Northbrook also assumed all of the $50 million in deposits at an 0.50 percent premium.

Community First was the 14th FDIC-insured failure this year.

Also on Friday, the California Department of Financial Institutions seized Oakland Municipal Credit Union and ordered its liquidation. The state cited inadequate capital in its decision to take possession of the 7,800-member institution.

The National Credit Union Administration was appointed liquidating agent of the Oakland, Calif.-based institution. The 47-year-old credit union’s $88 million in assets were purchased by Western Federal Credit Union, which also assumed its liabilities.

Oakland was the first credit union failure of 2011.

So far this year, Mortgage Daily has tracked the closure of failure of 17 mortgage-related businesses or operations.

Related Posts

Centex Home Equity Announces Name and Brand Change to National Mortgage, LLC

Third-Quarter 2012 Mortgage Litigation Index

Lawsuits involving excessive fees, servicing fees and loan fees beyond state maximums. Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story Fannie Mae and Freddie Mac Orangeburg County, Richland County, South...

Centex Home Equity Announces Name and Brand Change to National Mortgage, LLC

Net Branch Lawsuits

Litigation involving net branch operations. Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story PHH Mortgage Corp. Mathews Supreme Court of Virginia na Court held that the term "branch office" includes not only...

Centex Home Equity Announces Name and Brand Change to National Mortgage, LLC

Whistleblower Lawsuits

Litigation related to loan servicing, including escrow issues, transfer of servicing and servicing borrowers in bankruptcy and foreclosure.   Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story Bank of...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming paperwork has been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and furniture need to...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand-new mortgage loan can be a difficult task, especially for first-time homeowners.   After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first...

Newsletter

Don’t worry, we don’t spam