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7 Banks, 3 Wholesalers, 1 Net Branch Close

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Six of seven banks shut down by bank regulators Friday were owned by the same holding company, and all six were heavy in construction-and-land-development loans. The seventh was the first bank failure in New York in five years. Other recent casualties include three wholesale operations and a net branch network.

The New York State Banking Department announced Friday the closing of Waterford Village Bank. As is the case with all failures of federally insured financial institutions, the Federal Deposit Insurance Corporation was appointed receiver.

“We determined that the management team’s inability to adequately and timely address problems outlined in a Feb. 12 cease-and-desist order led to the bank being critically undercapitalized,” the state said. “Waterford Village Bank is the first failure in New York since 2004.”

The failed institution was based in Clarence, N.Y., and founded less than three years ago. Only 15 employees worked there at the end of March.

Waterford’s assets stood at $61 million as of March 31. One- to four-unit residential loans were $19 million, commercial mortgage holdings were $19 million and construction-and-land-development loans were $4 million.

Evans Bank, N.A., assumed all of Waterford’s $58 million in deposits as of March 31. It also acquired “essentially all of the assets” with the FDIC sharing in losses on $56 million.

The FDIC, which issued a cease-and-desist order against Waterford on Feb. 12, expects to lose $6 million on the failure of Waterford — the 58th so far this year.

The 59th through 64th failures were all subsidiaries of Security Bank Corp. based in Macon, Ga. All six institutions were shut down by the Georgia Department of Banking and Finance — which handed control over to the FDIC.

Four of the subsidiaries faced FDIC cease-and-desist orders on April 17.

State Bank and Trust Co. assumed all of the six bank’s total $2.4 billion in deposits. In addition, it acquired $2.4 billion of Security’s $2.8 billion in total assets as of March 31.

The FDIC agreed to share in losses on transaction on approximately $1.7 billion of the assets. In all, losses from the six banks are expected to deplete the Deposit Insurance Fund by $807 million.

Subsidiary Date Founded Deposits as of March 31 Total Assets as of March 31 Number of Employees as of March 31 Residential Mortgages Commercial Mortgages Construction-and-Land Development Loans
Security Bank of Bibb County 11/4/1988 $1.0 billion $1.2 billion 137 $127 million $230 million $440 million
Security Bank of Houston County 9/14/1987 $0.3 billion $0.4 billion 60 $47 million $54 million $84 million
Security Bank of Jones County 8/28/1909 $0.4 billion $0.5 billion 41 $72 million $47 million $134 million
Security Bank of Gwinnett County 2/24/2003 $0.3 billion $0.3 billion 16 $14 million $34 million $151 million
Security Bank of North Metro 5/20/2002 $0.2 billion $0.2 billion 19 $7 million $51 million $83 million
Security Bank of North Fulton 9/19/2003 $0.2 billion $0.2 billion 19 $18 million $45 million $40 million

Third-party customers of M&T Bank will no longer be able to close construction loans with the company, according to a message from a company employee. Construction loans in process must be closed by Aug. 31.

The Mortgage Lender Implode-O-Meter reported the following mortgage company failures.

Company Headquarters Type Date of Closing # Employees
American Partners Bank Carmel, Ind. wholesaler July 20 22
BankersWest Funding Corp. City of Industry, Calif. wholesaler July 17 75
Home Consultants Inc. dba HCI Mortgage Lake Ariel, Pa. net branch July n.a.

So far this year, MortgageDaily.com has tracked the closing of 114 mortgage-related operations.

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