A small bank failure last week is expected to generate some hefty losses, while the former owners of a much larger bank that failed six years ago are challenging regulators’ decision to close it.
The South Carolina State Board of Financial Institutions seized and shut down Allendale County Bank on Friday.
The financial institution, which operated from Fairfax, S.C., was established in 1933. As of the end of last year, it had just 21 employees.
Among its $55 million in total assets were $4 million in residential loans and $1 million in commercial real estate loans. Total deposits stood at $51 million.
The Federal Deposit Insurance Corp., which was appointed receiver, held a secret bidding process and awarded the winning bid for all the assets and deposits to Palmetto State Bank.
More than $17 million in losses to the Deposit Insurance Fund are expected from the failure of Allendale — a huge amount given its size.
Including Allendale, six FDIC-insured banks have failed so far in 2014.
The Columbian Bank and Trust Co. in Topeka, Kan., was closed in August 2008 by the Office of the State Bank Commissioner of Kansas. At the time, the failure of the $752 million company was expected to result in FDIC losses of $60 million.
The former owners of the bank have filed a lawsuit in U.S. District Court for the District of Kansas against Kansas Bank Commissioner J. Thomas Thull, Deputy Bank Commissioner of Kansas Judi Stork, Acting Bank Commissioner of Kansas Deryl Schuster, former Bank Commissioner of Kansas Edwin Splichal and the Office of the State Bank Commissioner of Kansas, according to a story in the Kansas City Business Journal. The plaintiffs are disputing the seizure because Columbian Bank was allegedly still profitable — though the level of profit was just $3,000 in June 2008.
Mayfair Federal Credit Union, which was placed into conservatorship in November 2013, has been liquidated by the National Credit Union Administration, according to March 31 statement. Freedom Credit Union took over Mayfair’s members, deposits and some of the loan portfolio and other assets.
“NCUA made the subsequent decision to liquidate and discontinue operations after determining the Mayfair was insolvent with no prospect for restoring viable operations,” the NCUA stated.
In January, the Administrator of the Kansas Department of Credit Unions closed Parsons, Kan.-based Parsons Pittsburg Credit Union. The NCUA, which was named conservator, said last month that it liquidated Parsons. Its members, assets and deposits were assumed by Golden Plains Credit Union.
Like with Mayfair, the regulator said Parsons had no chance of recovery.
Mortgage Daily has tracked three credit union failures so far this year.
A settlement in November 2013 between the NCUA and JPMorgan Chase & Co. led to a sharp drop in total projected assessments associated with the Temporary Corporate Credit Union Stabilization Fund. The assessments declined $2.2 billion at the upper end between July 2013 and December 2013.
Denver-based Allonhill filed for Chapter 11 bankruptcy protection on March 26 in U.S. Bankruptcy Court for the District of Delaware just three weeks after losing a $22 million lawsuit to Aurora Bank, the Denver Business Journal reported. Allonhill was founded during the depths of the financial crisis in 2008 by Sue Allon but saw its fortunes turn in 2012 when it was disqualified to review foreclosures.
So far during 2014, Mortgage Daily has tracked the demise of 16 mortgage-related entities.
