Cleveland, Ohio’s Amtrust Bank was seized by regulators Friday, making it the fourth largest institution to go under in 2009. Five smaller institutions – three in Georgia and one each in Illinois and Virginia – were also shuttered over the weekend.
These latest six closings bring the total number of failed banks for the year to 130, and are expected to cost the FDIC’s already-depleted insurance fund a combined $2.4 billion. As DSNews.com previously reported, the agency’s reserve used to protect consumers’ deposits has slipped into the red – $8.2 billion in the hole at the end of the third quarter.
The failure of Amtrust alone will cost the FDIC an estimated $2 billion. Established in 1889 as The Ohio Savings and Loan Company, Amtrust was a nationwide originator of home mortgages and also offered construction and development loans. But according to a statement from its regulator, the Office of Thrift Supervision (OTS), Amtrust “was in an unsafe and unsound condition because of substantial loan losses, deteriorating asset quality, and insufficient capital.” OTS said a high level of AmTrust’s problem assets was attributable to residential and land acquisition, development, and construction lending concentrated in Florida, California, Arizona, and Nevada.
In an FDIC-assisted transaction, New York Community Bank in Westbury, New York agreed to acquire all of Amtrust’s $8 billion in deposits, wholesale borrowings of approximately $3 billion, and “certain assets,” Community Bank said in a press statement. According to the New York institution, these assets, totaling $11 billion, include performing single-family mortgage and consumer loans of approximately $6 billion which are subject to a loss-share agreement with the FDIC; cash of approximately $4 billion; and securities of approximately $1 billion.
Community Bank, though, was quick to point out that it declined to take on any non-performing loans serviced by AmTrust Bank or any other REOs; construction, land, or development loans; private-label securities, or mortgage servicing rights. The FDIC said it will retain these assets for later disposition.
The FDIC also transferred to New York Community Bank all qualified financial contracts to which AmTrust was a party, and said as part of the overall transaction, Community Bank has issued it a cash participant instrument, which the FDIC has until December 23 to exercise, allowing it to obtain shares of common stock in Community Bank.
Georgia leads the nation with the most bank collapses in 2009. Regulators closed three more institutions in the state on Friday, bringing that total to 24 for the year.
The Buckhead Community Bank in Atlanta, Georgia was acquired by State Bank and Trust Company of Macon, Georgia. The Buckhead Community Bank had six branches in Georgia operating under various names. State Bank also assumed all of the failed institution’s $838 million in deposits and total assets of $874 million. The FDIC estimates the cost to its deposit insurance fund will be $241.4 million.
State Bank and Trust Company also took over the operations of First Security National Bank in Norcross, Georgia. First Security had four branches, deposits of $123 million, and total assets of $128 million. The FDIC said it expects First Security’s failure to cost $30.1 million.
The Tattnall Bank of Reidsville, Georgia was acquired by HeritageBank of the South. in Albany, Georgia. The Tattnall Bank had two branches, $47.3 million in deposits, and total assets of $49.6 million. Its failure is expected to cost the FDIC $13.9 million.
Illinois is second in the nation when it comes to failed banks, with 20 in 2009. Benchmark Bank in Aurora, Illinois is the latest institution to join that list. Chicago’s MB Financial Bank agreed to take over Benchmark’s five branches, its $181 million in deposits, and purchased approximately $139 million of its $170 million in assets. The cost of Benchmark’s collapse is estimated at $64 million.
Greater Atlantic Bank in Reston, Virginia was also closed by the OTS. The FDIC brokered a deal with Sonabank of McLean, Virginia, to acquire the failed institution’s five branches, its $179 million in deposits, and total assets of $203 million. The FDIC expects Greater Atlantic’s closure to cost its insurance fund $35 million.
Info Source: dsnews.com
Passing through the Fort Myers, Fla., airport a few weeks ago, I noticed people eagerly signing up for a free bus tour of foreclosed real estate—with all properties offering water views. During the ride to my hotel, the young driver volunteered that he had just bought his first house, paying $65,000 for a foreclosed property in nearby Cape Coral that last sold for over $250,000. He said he had never expected to be able to buy anything on a driver’s salary, let alone something that nice.
When will the housing slump finally end? Even the experts’ crystal balls are hazy. The Wall Street Journal, which Thursday reported its latest quarterly survey of housing data, says it depends on which city or part of the country you’re talking about. Home sales were up compared to last year in Washington, D.C., and Northern Virginia, Orlando, Minneapolis, Southern California, and the San Francisco Bay area, according to findings from research firm MDA DataQuick as well as reports from local real estate practitioner organizations. Sales declined in New York City and nearby Long Island, Chicago, and Charlotte, N.C., and the outlook was particularly bleak in Miami-Fort Lauderdale and much of Florida, Detroit, and Las Vegas. But Jody Kahn, an analyst at John Burns Real Estate Consulting, a research organization, points out that there are variations even in the hardest-hit metro areas with the most attractive neighborhoods continuing to thrive. Employment is the most telling factor, says Mark Zandi, chief economist at Moody’s Economy.com. “If people don’t have jobs or fear losing their jobs, then buying homes is out of the question,” he says.
