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Bank with Big Mortgage Branch Operation Fails

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A $400 million bank was among two federally insured financial institution failures Friday, and no other firm was interested in acquiring the bank — impacting a hundred mortgage branch managers that are part of a national branch acquisition business operated by the bank. In all, the failures of four financial institutions have been reported.

In Ellaville, Ga., the state’s Department of Banking and Finance seized Central Bank of Georgia. The maneuver was done with an order issued by the Superior Court of Schley County as required by the Official Code of Georgia, Section 7-1-150(a).

The code authorizes such seizures “whenever such financial institution is either 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,” according to an announcement.

The Federal Deposit Insurance Corp., which was appointed receiver of the failed bank, agreed to a bid by Ameris Bank to acquire all of Central Bank’s $279 million in total assets with the FDIC sharing in losses on $193 million of the assets.

Ameris also assumed all of Central Bank’s $267 million in total deposits.

Central Bank was founded in 1910. As of Sept. 30, it employed 57 people. The company owned $66 million in home loans, $61 million in commercial real estate loans and $36 million in construction-and-development loans.

William Ben Dupree III of Central Bank of Georgia was hit in December 2010 with an FDIC Notice of Intention to Remove From Office and Prohibit From Further Participation. The FDIC also issued a Notice of Assessment of a Civil Money Penalty, Findings of Fact and Conclusions of Law.

Central Bank had been hit with an FDIC cease-and-desist order in December 2009, while a temporary cease-and-desist order was issued in July 2009.

The Deposit Insurance Fund is projected to be depleted by $68 million as a result of Central Bank’s demise.

A bigger failure, that of Home Savings of America, was initiated later Friday by the Office of the Comptroller of the Currency. The regulator had attempted to make the bank’s management bring it into capital compliance with a prompt corrective action in December 2011 and a cease-and-desist order against the bank in June 2010.

“The OCC acted after finding that the institution had experienced substantial dissipation of assets and earnings due to unsafe or unsound practices,” the regulator said in a statement. “The OCC also found that the institution incurred losses that depleted its capital, the institution is critically undercapitalized, and there is no reasonable prospect that the institution will become adequately capitalized without federal assistance.”

The bank was founded in 1934, and its failure will impact an estimated 810 employees as of this past September, though that headcount was 1,714 a year earlier.

Home Savings reports $3.5 billion in 2011 originations. It operates a branch recruitment business in 50 states. In September 2010, the company reported nearly 100 branches conducting their own marketing, according to a news release at the time. A listing currently posted on its website includes branches in California, New York and Texas as well as Illinois and Ohio.

The FDIC, which as also appointed receiver for the Little Falls, Minn.-based bank, was unable to find another bank that was willing to take on Home Savings’ $434 million in troubled assets as of Dec. 31, 2011. Most of its assets were tied up in residential loans, which totaled $326 million as of Sept. 30, 2011. No commercial real estate assets were owned, and less than $1 million was invested in C&D assets.

The company owed depositors $432 million — a very slim margin between assets and deposits.

Home Savings was the 11th FDIC-insured bank to fail in 2012. The cost of its cleanup is estimated at $39 million.

A M Community Credit Union was taken over on Feb. 17 by the National Credit Union Administration and the Wisconsin Office of Credit Unions. The Kenosha, Wis.-based institution serviced 16,000 members and reported assets of $125 million.

The NCUA was empowered to take over A M through the Federal Credit Union Act. The regulator was appointed conservator of the failed credit union and will operate it with “expert management” appointed to correct operational weaknesses.

People for People Community Development Credit Union was liquidated on Feb. 19 by the NCUA. TruMark Financial Credit Union of Philadelphia, which has $1.35 billion in assets, took over the liquidated institution’s 1,600 members and $0.6 million in loans.

“NCUA made the decision to liquidate People for People CDCU and discontinue its operations after determining the credit union was insolvent and has no prospect for restoring viable operations on its own,” a statement said.

Endicott, Md.-based Candor Mortgage Corp., which recruited at least 180 loan originators from Carteret Mortgage Corp. as the net branch closed operations in 2008, has itself apparently become a casualty. Except for the home page, its website, www.CandorMortgage.com, is not working.

All registrations in the company’s name with the Nationwide Mortgage Licensing System & Registry were either denied, expired, revoked or surrendered by January 2011.

The state of Maine sent a renewal notice on Feb. 4, 2011, to an Ellicott City location, and made attempts to reach the company by telephone but never received a response. The Maine license was terminated on Jan. 31, 2011. Connecticut’s banking commissioner received a notice that Candor Mortgage Corp.’s surety bond would be canceled, leading to the July 2010 revocation of that license.

Aurora Loan Services and parent Aurora Bank were subsidiaries of Lehman Brothers Holding Inc. before the meltdown of the former investment banking icon sparked a global financial crisis in 2008. In November 2010, the U.S. Bankruptcy Court approved a settlement that meant Lehman had 18 months to sell Aurora Bank. As of June 30, 2011, Aurora serviced $68.7 billion.

National Mortgage News reported on Feb. 17 that Aurora halted residential production. The company is reportedly in negotiations to be acquired by Nationstar Mortgage.

Mortgage Daily has tracked the closing of 17 mortgage-related businesses during 2012.

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