Bank Fails: Chicago mortgage loans to undocumentend immigrants-2 Georgia, 2 Florida Banks also fair

The three branches of Second Federal Savings and Loan Association of Chicago, Chicago, Illinois were closed with Hinsdale Bank & Trust Company, Hinsdale, Illinois (Wintrust Financial Corporation), to assume all of the deposits. The bank was founded January 1, 1923 and had 62 full time employees as of March 31, 2012 at two offices in Chicago and one in Cicero. Year-end 2007, the bank had 97 full time employees.

Hinsdale Bank and Trust is part of the Wintrust Financial Corporation out of Lake Forest, Illinois, with 15 branches and 78 branches, all in Illinois, many from failed banks. This will increase the bank to 81 branches, if they keep all of them in this purchase.

http://www2.fdic.gov/idasp/main.asp

As of March 31, 2012, Second Federal Savings and Loan Association of Chicago had approximately $199.1 million in total assets and $175.9 million in total deposits. Hinsdale Bank & Trust Bank will pay the FDIC a premium of $100,000 to assume all of the deposits of the failed bank. In addition to assuming all of the deposits, Hinsdale Bank & Trust Company agreed to purchase approximately $14.2 million in assets, comprised mainly of cash. All loans, including consumer and mortgage, will be retained by the FDIC for later disposition. Loan customers should continue to make their payments as usual.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $76.9 million.

Second Federal Savings and Loan Association of Chicago had been citied several times. In 2008, the bank attempted to become a “minority institution,” reportedly to widen its appeal to investors. As a mutual bank, Second Federal was owned by depositors. Three-fourths of its membership is Latino, but the problem was the bank’s “board currently is not representative,” explained Francisco Menchaca, a Second Federal association member pushing for the lender to become a minority depository institution, or MDI.

In the last few years the bank became very much into mortgage loans, thinking the market would never end. They particularly gained notoriety in for making home loans to undocumented immigrants. When the housing market burst, many of the homeowners could not make the payments and the housing market found most of the houses underwater, overcharged by realtors selling to the Latino marketplace.

Year-end 2011 bank reportedly had $13.6 million in uncollected collected income from noncurrent loans.

Non-Current Loans (in millions)
2006 $2.0
2007 $2.0
2008 $11.2
2009 $21.7
2010 $12.9
2011 $13.6
3/31 $15.2

The bank directors were also taking care of themselves, as of year-end 2011 there were reported $203.5 million insider loans (they are insiders of the bank or the bank’s affiliate exceeds the higher of $25,000 or 5 percent of member bank’s unimpaired capital and unimpaired surplus and are generally director. The board of directors votes on these loans, except for the director asking for the loan.)

http://www.bankencyclopedia.com/Second-Federal-Savings-and-Loan-Association-of-Chicago-27986-Chicago-Illinois.html

March 23, 2009 cease and desist order appears too late
(http://files.ots.treas.gov/enforcement/97089.pdf as Note: the net equity dropped from $17.3 million) in 2009 to $9.8 million following a $10.3 million loss; all the problems seems to be in foreclosures of family residences.

http://files.ots.treas.gov/enforcement/97089.pdf

Tier 1 risk-based capital ratio 2.07% as of March 31, 2012.

Charge Offs
(in millions, unless otherwise)
2006 $42,000 ($42,000 1-4 family residential properties)
2007 $315,000 ($315,000 1-4 family residential properties)
2008 $1.6 ($1.6 1-4 family residential properties, $30,000 nonfarm/nonresidential)
2009 $9.5 ($8.9 1-4 family residential properties, $311,000 nonfarm/nonres., $300,000 multifamily)
2010 $6.0 ($6.0 1-4 family residential properties, $25,000 nonfarm nonresidential)
2011 $3.2 ($3.2 1-4 family residential properties)
3/31 $1.0 ($941,000 1-4 family residential, $62,000 multifamily, $44,000 nonfarm nonres.)

Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

Net Equity
2006 $29.3
2007 $29.5
2008 $27.7
2009 $17.3
2010 $9.8
2011 $4.0
3/31 $2.4

Profit
2006 $544,000
2007 -$48,000
2008 -$1.8
2009 -$10.3
2010 -$7.4
2011 -$5.9
3/31 -$1.5

Non-Current Loans
2006 $2.0
2007 $2.0
2008 $11.2
2009 $21.7
2010 $12.9
2011 $13.6
3/31 $15.2

http://www.fdic.gov/news/news/press/2012/pr12086.html

The two branches of Georgia Trust Bank, Buford, Georgia were closed with Community & Southern Bank, Atlanta, Georgia, to assume all of the deposits. Founded May 16, 2005 the bank had 20 full time employees at its offices in Buford and Kennesaw. Year-end 2007 they had 31 full time employees.

Not shown here is the total of Insider Loans of $126,495,000 that appears in “Bank:” http://www.bankencyclopedia.com/Georgia-Trust-Bank-57847-Buford-Georgia.html#ovGeneral

Tier 1 risk-based capital ratio 2.65%

(in millions, unless otherwise)

Net Equity
2006 $11.5
2007 $13.2
2008 $13.6
2009 $10.4
2010 $3.9
2011 $3.0
3/31 $2.1

Profit
2006 -$547,000
2007 $73,000
2008 -$2.4
2009 -$2.6
2010 -$6.5
2011 -$1.2
3/31 -$829,000

Non-Current Loans
2006 $1.1
2007 $1.7
2008 $2.6
2009 $17.0
2010 $14.9
2011 $16.7
3/31 $17.0

Charge Offs
2006 0 notoriety in recent years for making home loans to undocumented immigrants $250,000 ($350,000 construction/land development)
2008 $920,000 ($768,000 construction/land, $152,000 commercial/industrial)
2009 $722,000 ($461,000 $148,000 commercial/ind., $47,000 individuals0
2010 $2.3 ($981,000 commercial/ind., $526,000 construction, $473,000 nonfarm/nonres., $363,000
1-4 family, $22,000 individuals)
2011 $832,000 ($379,000 1-4 family, $235,000 commercial/industrial, $159,000 construction/land, $59,000 nonfarm/nonres.)
3/31 $94,000 ($66,000 1-4 family, $30,000 nonfarm, nonres.,-$1,000 construction/land, -$1,000 commercial)

Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

As of March 31, 2012, Georgia Trust Bank had approximately $119.8 million in total assets and $117.4 million in total deposits. Community & Southern Bank will pay the FDIC a premium of 0.50 percent to assume all of the deposits of Georgia Trust Bank. In addition to assuming all of the deposits of the failed bank, Community & Southern Bank agreed to purchase approximately $111.5 million of the failed bank’s assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and Community & Southern Bank entered into a loss-share transaction on $65.9 million of Georgia Trust Bank’s assets. Community & Southern Bank will share in the losses on the asset pools covered under the loss-share agreement.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $20.9 million

http://www.fdic.gov/news/news/press/2012/pr12083.html

The three branches of First Cherokee State Bank, Woodstock, Georgia were closed with Community & Southern Bank, Atlanta, Georgia, to assume all of the deposits. Founded November 27, 1989, the bank had 64 full time employees at its offices in Canton, Marietta, and Woodstock. The bank had 72 full time employees as of the end of 2007.

Tier 1 risk-based capital ratio 1.66%

Criticism about banking regulations in Georgia continue as the state again is leading the nation in bank foreclosures. In 2012, Georgia accounted for 25% of the nation’s 92 banking failures and to date in 2012 now has eight, representing 22% of bank failures for this year.

To date, Community & Southern has acquired 7 of the failed banks since 2010, bringing it to having 33 branches across Georgia. the bank was originally formed to build a state wide banking enterprise by acquiring failed banks.

Again, the real estate market led to its demise:

(in millions, unless otherwise)
Charge Offs
2006 $68,000 ($40,000 construction/land, $47,000 individuals, -$18,000 1-4 family, -$1,000 commercial)
2007 $741,000 ($670,000 nonfarm/nonres., $34,000 construction, $38,000 individual, -$1,000 commercial)
2008 $4.8 ($4.7 construction/land, $52,000 individuals, $17,000 1-4 family)
2009 $4.1 ($3.9 construction/land, $113, 000 nonfarm/nonres, $25,000 $commercial, $16,000 1-4 family, $2,000 individuals)
2010 $5.0 ($4.9 construction/land, $32,000 nonfarm, $31,000 1-4 family, $10,000 individuals)
2011 $2.4 ($2.3 construction/land, $128,000 1-4 family, $25,000 individuals, $15,000 nonfarm/nonres.)
3/31 0 ($30,000 construction/land, -$98,000 1-4 family, -$4,000 individuals)
Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

Net Equity
2006 $29.0
2007 $29.0
2008 $17.3
2009 $11.0
2010 $10.1
2011 $4.9
3/31 $2.7

Profit
2006 $7.4
2007 $4.6
2008 -$11.3
2009 -$11.5
2010 -$5.3
2011 -$7.9
3/31 -$2.2

Non-Current Loans
2006 $271,000
2007 $5.3
2008 $12.9
2009 $27.2
2010 $18.2
2011 $14.9
3/31 $13.4

As of March 31, 2012, First Cherokee State Bank had approximately $222.7 million in total assets and $193.3 million in total deposits. Community & Southern Bank will pay the FDIC a premium of 0.50 percent to assume all of the deposits of First Cherokee State Bank. In addition to assuming all of the deposits of the failed bank, Community & Southern Bank agreed to purchase essentially all of the failed bank’s assets.

The FDIC and Community & Southern Bank entered into a loss-share transaction on $141.8 million of First Cherokee State Bank’s assets. Community & Southern Bank will share in the losses on the asset pools covered under the loss-share agreement.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $36.9 million.

http://www.fdic.gov/news/news/press/2012/pr12084.html

The three branches of The Royal Palm Bank of Florida, Naples, Florida were closed with First National Bank of the Gulf Coast, Naples, Florida, to assume all of the deposits. Founded December 17, 2001, the bank had 28 full time employees at Fort Myers, Marco Island, and Naples. In 2007, the bank had 37 full time employees.

Tier 1 risk-based capital ratio 2.02%

In addition, the two branches of Heartland Bank, Leawood, Kansas were closed (see article that follows.) Royal Palm Bank and Heartland Bank were affiliates of the Company. Mercantile Bank in Quincy, Illinois, is a separate, Illinois state-chartered banking institution. Although Mercantile Bank, Royal Palm Bank and Heartland Bank were all owned by the Company, each is a separate entity and each is separately operated. Mercantile itself has received regulatory comments and has agreed to a consent order.
(http://www.wgem.com/Global/story.asp?S=14446565)

The charge offs as well as the nonconforming loans at Royal Palm Bank of Florida are indicative of the real estate market in Florida:

(in millions, unless otherwise)
Charge Offs
2006 0
2007 $545,000 ($284,000 construction/land development, $261,000 1-4 family homes)
2008 $3.7 ($1.8 construciton/land, $924,000 commercial/ind., $690,000 1-4 family, $250,000 nonfarm, $5,000 individuals)
2009 $13.7 ($6.9 1-4 family, $4.3 construction/land, $1.8 nonfarm nonres, $694,000 commercial/ind.)
2010 $6.9 ($2.7 construction/land, $2 1-4 family, $997, commercial/ind., $734,000 nonfarm nonres.)
2011 $4.3 ($3.2 construction/land, $587,000 commercial/ind., $417,000 nonfarm nonres, $22,000 1-4 fam.)
3/31 $495,000 ($319,000 1-4 family, $154,000 nonfarm nonres, $22,000 construction/land dev.)

Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

The bank also had a high number of “insider loans,” they are insiders of the bank or the bank’s affiliate exceeds the higher of $25,000 or 5 percent of member bank’s unimpaired capital and unimpaired surplus and are generally director. The board of directors votes on these loans, except for the director asking for the loan.

Net Equity
2006 $41.3
2007 $42.00
2008 $40.3
2009 $13.6
2010 $2.3
2011 $2.1
3/31 $1.2

Profit
2006 $147,000
2007 $561,000
2008 -$7.0
2009 -$41.4
2010 -$12.7
2011 -$2.8
3/31 -$878,000

Non-Current Loans
2006 $2.7
2007 $2.7
2008 $11.7
2009 $14.9
2010 $15.9
2011 $8.7
3/31 $8.5

As of March 31, 2012, The Royal Palm Bank of Florida had approximately $87.0 million in total assets and $85.1 million in total deposits. In addition to assuming all of the deposits of the failed bank, First National Bank of the Gulf Coast agreed to purchase essentially all of the failed bank’s assets.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $13.5 million.

http://www.fdic.gov/news/news/press/2012/pr12082.html

The two branches of Heartland Bank, Leawood, Kansas, were closed with Metcalf Bank, Lees Summit, Missouri, to assume all of the deposits. Founded January 1, 1904, the bank had 14 employees at its office in Leawood, opened 1/1/1904, and Kansas City, opened 12/29/2006. In 2007, the bank had 35 full time employees and was active in real estate loans, which lead to both Royal Palm Bank of Florida and Leadwood, Kansas demise.

The bank also had a high number of “insider loans,” they are insiders of the bank or the bank’s affiliate exceeds the higher of $25,000 or 5 percent of member bank’s unimpaired capital and unimpaired surplus and are generally director. The board of directors votes on these loans, except for the director asking for the loan.

Tier 1 risk-based capital ratio 2.89% as of March 31, 2012.

(in millions, unless otherwise)
Charge Offs
2006 0
2007 0
2008 $2.0 ($2.0 construction/land, $87,000 commercial/industrial)
2009 $5.4 ($4.5 construction/land, $379,000 other loans, $229,000 commercial/industrial, $130,000 nonfarm/nonindustrial, $80,000 1-4 family homes)
2010 $7.8 ($3.5 loans to depository institutions, $1.8 other loans, $1.7 construction/land, $401,0001-4 family, $300,000 nonfarm/nonres.)
2011 $2.8 ($1.3 commercial/industrial, $402,000 other loans, $915,000 commercial/ind., $281,000 1-4 fam.)

Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

Net Equity
2006 $15.2
2007 $18.3
2008 $17.1
2009 $18.1
2010 $6.0
2011 $2.4
3/31 $2.0

Profit
2006 $1.8
2007 $1.4
2008 -$2.5
2009 -$3.5
2010 -$13.0
2011 -$3.5
3/31 -$375,000

Non-Current Loans
2006 0
2007 $6.7
2008 $14.0
2009 $11.7
2010 $9.6
2011 $2.5
3/31 $4.1

As of March 31, 2012, Heartland Bank had approximately $110.0 million in total assets and $102.6 million in total deposits. Metcalf Bank will pay the FDIC a premium of 1.11 percent to assume all of the deposits of Heartland Bank. In addition to assuming all of the deposits of the failed bank, Metcalf Bank agreed to purchase essentially all of the failed bank’s assets.

The FDIC and Metcalf Bank entered into a loss-share transaction on $54.3 million of Heartland Bank’s assets. Metcalf Bank will share in the losses on the asset pools covered under the loss-share agreement.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $3.1 million.

http://www.fdic.gov/news/news/press/2012/pr12085.html

List of Bank Failures:
http://www.fdic.gov/bank/individual/failed/banklist.html

Bank Beat:
http://www.leasingnews.org/Conscious-Top%20Stories/Bank_Beat.htm