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7 Failures for 7 IL Banks

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Less than five banks had failed this year in Illinois — though all that changed Friday. One state north, a mortgage banking firm is ending wholesale operations, while an Ohio credit union and an Arizona lender have failed.

The massacre began with the Office of the Comptroller of the Currency’s seizure of 105-year-old AMCORE Bank, N.A. The Rockford, Ill., bank had been on a selling spree — unloading $480 million in Illinois loans in January and selling a $135 million portfolio of loans in December. But it also faced an OCC cease-and-desist order and a formal agreement with the Federal Reserve Bank of Chicago last year.

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

The Federal Deposit Insurance Corporation was appointed receiver of AMCORE as well as all of Friday’s bank failures.

Broadway Bank was next. The Illinois Department of Financial and Professional Regulation – Division of Banking closed the Chicago bank, which was hit with an FDIC cease-and-desist order in January.

The state then seized Citizens Bank & Trust Company of Chicago. The FDIC hit Citizens with a $5,500 civil money penalty in December.

New Century Bank followed, with state regulators declaring the Chicago-based institution insolvent. New Century faced a February cease-and-desist order by the FDIC.

map of Illinois
Google map of Illinois

After that, the banking department closed down Lincoln Park Savings Bank, followed by Peotone-based Peotone Bank and Trust Co. The FDIC issued cease-and-desist orders against both banks in October.

In just Illinois, 10 federally-insured financial institutions have failed so far this year, while the national figure is 57.

The National Credit Union Administration said Friday that it assumed control of St. Paul Croatian Federal Credit Union’s operations. A declining financial condition was cited in the decision to seize the institution. Assets at the 67-year-old credit union stand at $239 million, while membership is 5,400. It was the seventh credit union failure this year.

The loss of its warehouse line-of-credit forced the shutdown of Chandler, Ariz.-based American Mortgage Specialists Inc., the Mortgage Lender Implode-0-Meter reported. Headcount reportedly peaked at 1,200 — though it had more recently fallen to less than 50 — and monthly production had fallen from a peak of $38 million in 2006 to $20 million.

Universal Mortgage Corp. has announced that it will exit wholesale lending, according to an April 23 bulletin from the Mequon, Wis.-based company that was published by the Implode-0-Meter. The last day to clear loans to close was Friday, while all disbursements must be completed by April 30.

Universal generated 15,480 loan applications for $2.4 billion during 2008, AllMortgageDetail reports. Employment stands at 230, including 115 in Mequon, according to Manta.com.

MortgageDaily.com has tracked 73 mortgage-related closings this year.

A full table of Friday’s bank failures follows.

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