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Bank Failures Slow to a Trickle

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This year is turning out to be a very quiet one for bank failures — which have slowed to a trickle compared to just a few years ago. Even credit union failures, which have traditionally numbered far fewer than banks, are keeping pace.

On Friday, the Illinois Department of Financial and Professional Regulation Division of Banking announced that it seized Edgebrook Bank in Chicago.

In its statement, the regulator noted that the bank had been operated
 in an unsafe and unsound manner — leaving no choice but to close it down.

Edgebrook had just $90 million in total deposits as of March 31, the same as it held in total assets. It owned $38 million in home loans, $19 million in commercial real estate loans and $13 million in construction-and-land-development loans.

Just 16 people worked at the bank, which was established in 2005.

The Federal Deposit Insurance Corp. was named receiver of the failed institution. In turn, the FDIC held a secret auction and awarded the winning bid to Republic Bank of Chicago.

But Republic Bank only purchased $80 million of the assets, though it assumed all the deposits.

Edgebrook was the recipient of a 2009 FDIC cease-and-desist order.

The FDIC expects its Deposit Insurance Fund to be depleted by $17 million as a result of Edgebrook’s failure — just the fifth this year.

Year-to-date bank casualties include Doral Bank in San Juan, Puerto Rico, which the FDIC took over on Feb. 27.

To put bank failures in perspective, by this date in 2010, 68 FDIC-insured banks had failed. By the end of that year,
157 banks had gone down.

On April 30, New Bethel Federal Credit Union was placed into conservatorship by the National Credit Union Administration.

The move was made to maintain regular services to members as the NCUA works to resolve issues affecting the institution’s safety and soundness.

Portsmouth, Virginia-based New Bethel had just 176 members and $0.1 million in assets. The entity was formed in 1978 to serve members and employees of New Bethel Baptist Church.

The same day, TLC Federal Credit Union was liquidated by the NCUA. All of the Tillamook, Oregon, credit union’s members, shares and loans were taken over by Fibre Federal Credit Union.

TLC had 13,375 members and $109 million in assets. It was chartered in 1957 and most recently served communities in three Oregon counties.

“NCUA made the decision to liquidate TLC Federal Credit Union and discontinue its operations after determining the credit union was insolvent with no prospect for restoring viable operations on its own,” the regulator stated. “NCUA’s Asset Management and Assistance Center will take charge of certain assets of the closed credit union.”

A week earlier, the
Superintendent of the Ohio Division of Financial Institutions placed Montgomery County Credit Union Inc. in conservatorship and named the NCUA as conservator.

The state said it uncovered
unsafe and unsound practices at the Dayton, Ohio, credit union. Member count at the 52-year-old entity was 6,605, while the balance sheet had $27 million in assets.

North Dade Community Development Federal Credit Union was liquidated by the NCUA on March 31.
Operating from Miami Gardens, Florida, the 606-member financial institution had $3 million in assets. It was chartered in 1997 to cater to Northwest Dade County residents.

In all, Mortgage Daily has tracked to failure of five credit unions so far during 2015.

Including banks, non-banks and credit unions —
10 mortgage-related entities have closed down or failed so far in 2015.

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