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Over 50 Firms Fail This Year

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The failure of four banks Friday brought to 53 the number of mortgage-related firms to close this year. In excess of $300 million in losses are expected from the latest round of bank failures.

More than $123 million in losses are expected from the failure of seven-year-old McIntosh Commercial Bank, which was shut down Friday by the Georgia Department of Banking and Finance and handed it over to the Federal Deposit Insurance Corporation as receiver. The 59-employee Carrollton, Ga., bank’s $343 million in deposits as of Dec. 31, 2009, were assumed at par by CharterBank — which also acquired all of its $363 million in assets. The FDIC will share in losses on $263 million of the assets — which included $42 million in home loans, $56 million in commercial real estate loans and $72 million in construction-and-land-development loans.

In its announcement of the failure of Key West Bank, the Office of Thrift Supervision said the bank was critically undercapitalized and had no reasonable prospect of restoring capital. The OTS issued a cease-and-desist orders against the bank on Nov. 12, 2009. Centennial Bank assumed all of the Key West, Fla., bank’s $68 million in deposits for an 0.50 percent premium and acquire all of its $88 million in assets. Factoring in a $76 million loss-sharing agreement, the FDIC expects to the failure to cost the Deposit Insurance Fund $23 million.

Bank of the Ozarks acquired the $264 million in deposits of Unity National Bank, which was shut down Friday by the Office of the Comptroller of the Currency. The OCC issued a capital directive against the Cartersville, Ga.-based bank in December and entered a formal agreement in January 2009. Bank of the Ozark also acquired all of Unity’s $292 million in assets as of Dec. 31.

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

The FDIC entered a loss-share transaction on $206 million of the assets and expects to lose $67 million on Unity’s failure.

The last bank to fail Friday was nine-year-old Desert Hills Bank, which was seized by the Arizona Department of Financial Institutions. The Phoenix-based bank employed 107 people. Its $427 million in deposits were assumed at par by New York Community Bank, which also acquired all of its $497 million in assets — including $112 million in one- to four-family residential loans, $75 million in commercial mortgages and $59 million in construction-and-development loans.

“DFI and the FDIC have been coordinating the examination and supervision of this bank for months,” the state said in a news release. “DFI sought the receivership because the bank’s financial condition was unsafe and unsound.”

The FDIC, which issued a cease-and-desist order against Desert Hills in July 2009, agreed to a $326 million loss-share transaction and projected losses at $107 million as a result of the failure of Unity — the 41st FDIC-insured institution to fail during 2010.

MortgageDaily.com has tracked the closing of 53 mortgage-related operations this year.

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