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Over $100 mil in Losses from Friday’s Bank Failures

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Two financial institutions were seized by bank regulators last week, and the cost to clean up the pair of bank failures is expected to exceed $100 million.

The North Carolina Office of the Commissioner of Banks announced Friday that it closed down Parkway Bank. It was only the sixth state-chartered bank to fail in North Carolina since 1991.

As of the end of last year, staffing at the 11-year-old bank stood at 33 employees. Its residential loan assets totaled $20 million, while commercial real estate loans amounted to $30 million and construction-and-development holdings were $11 million.

The state appointed the Federal Deposit Insurance Corp. as receiver of the failed financial institution.

The FDIC issued a cease-and-desist order against Lenoir, N.C.-based Parkway in July 2010.

Following a secret bidding process, CertusBank, N.A., was awarded the winning bid by the FDIC. The deal included CertusBank’s acquisition of $99 million of Parkway’s $109 million in total assets and the assumption of all of Parkway’s $104 million in deposits.

CertusBank President K. Angela Webb said in a statement that transactions for Parkway’s customers will continue to be processed as usual.

Since 2011, CertusBank said it has acquired Hometown Community Bank as well as the assets of CommunitySouth Bank & Trust, First Georgia Banking Co. and Atlantic Southern Bank.

“As a result of this transaction, CertusBank expands its existing footprint across North Carolina and maintains its assets at $1.8 billion,” CertusBank said.

The FDIC projected that the Parkway failure will cost its Deposit Insurance Fund more than $18 million.

Also on Friday, the Georgia Department of Banking and Finance took possession of Douglas County Bank pursuant to the Official Code of Georgia, Section 7-1-150(a).

The code “authorizes the department in its discretion to take possession of the business and property of any state chartered financial institution 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.”

The Douglasville, Ga., bank was originally established in June 1974. Staffing was 74 employees as of Dec. 31, 2012. The financial institution owned $53 million in home loans, $86 million in CRE mortgages and $31 million in C&D assets.

It was hit with an FDIC cease-and-desist order in January 2009.

An order from the Superior Court of Douglas County appointed the FDIC as receiver. In turn, Hamilton State Bank assumed all of Douglas County Bank’s $314 million in deposits for an 0.5 percent premium.

Hamilton State Bank acquired $261 million of Douglas County Bank’s $317 million in total assets with the FDIC agreeing to share in losses on $159 million of the assets.

The cost of the failure is expected to exceed $86 million.

In all, 10 FDIC-insured banks have failed so far this year.

Mortgage Daily has reported on a total of 22 mortgage-related entities that have either failed or been closed down in 2012.

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