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Black Bank in Wisconsin Failure Obvious-Oklahoma Bank Failure, Why?

by Christopher Menkin


 


 

The third bank to fail in Wisconsin this year and the 25th to fail in the United States Legacy Bank, Milwaukee, Wisconsin, was closed with Seaway Bank and Trust Company, Chicago, Illinois, to assume all of the deposits. Founded July 29, 1999 by three Milwaukee African-American women -Deloris Sims, Margaret Henningsen and Shirley Lanier. They raised $5 million startup capital to open the inner city bank. The bank has 37 fulltime employees.


 

Bank equity had dropped from $10 million December 31, 2009 to $2.4 million December 31, 2010 as noncurrent loans jumped in the same period from close to $13 million to $40.7 million. The bank lost $15.2 million December 31, 2009, and $9.2 billion December 31, 2010.

While the public relation push by the bank was reportedly "serving “unbanked and under-served” individuals who previously had no place to turn for credit except with payday lenders," the losses did not occur here, but in very poor real estate loans.

The major charge offs came in 2009 with $5.8 million in loans secured by nonfarm nonresidential property, $4.8 million in commercial and industrial loans. The major charge off in 2010 was $1.1 million in commercial and industrial loans, followed by $241,000 in loans to individuals. Tier 1 risk-based capital ratio: 0.87%. Depending on the authority, 4% to 5% is good or acceptable. 10% is healthy. Anything above it is very healthy.

The FDIC and Seaway Bank and Trust Company entered into a loss-share transaction on $120.0 million of Legacy Bank's assets. Seaway Bank and Trust Company will share in the losses on the asset pools covered under the loss-share agreement

As of December 31, 2010, Legacy Bank had approximately $190.4 million in total assets and $183.3 million in total deposits. In addition to assuming all of the deposits of the failed bank, Seaway Bank and Trust Company agreed to purchase approximately $165.9 million of Legacy Bank's assets. The FDIC will retain the remaining assets for later disposition.
 

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $43.5 million.
http://www.fdic.gov/news/news/press/2011/pr11055.html


 


 

The First National Bank of Davis, Davis, Oklahoma, was closed with The Pauls Valley National Bank, Pauls Valley, Oklahoma, to assume all of the deposits. The bank was founded January 1, 1895 and had 25 full time employees. Its asset concentration was Commercial Lending Specialization.
 

The numbers from the FDIC in the end of year 2010 give no indication why the bank would be closed; however, it was reported by KXII.com that "Earlier this week FNB's CEO, W.A. Moore, Jr. was terminated - after a routine audit by the bank's regulatory agency." www.kxii.com/home/headlines/First_Nation...

The Office of the Comptroller of Currency gave a hint, but does not look like a full answer: “The OCC acted after finding that the bank had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices. The OCC also found that the bank incurred losses that depleted its capital and there is no reasonable prospect that the bank will become adequately capitalized without Federal assistance”.

  • Tier 1 risk-based capital ratio : 12.61%

  • Total risk-based capital ratio 13.87%

Both are very healthy ratio's from the December 31, 2010 FDIC filing. The other numbers also do not give any indication of troubles at the bank that evidently occurred in the last two months:

Bank equity had grown from $7 million December 31, 2009 to $7.3 million December 31, 2010 as well as net profit growing from $628,000 to $1.18 million. Noncurrent loans decreased from $1.55 million to $979,000 in the same period, while charge offs also decreased from $649,000 to $582,000 ( $320,000 commercial and industrial loans, $175,000 to individuals, $87,000 in real estate secured by 1-4 family residential properties.

The FDIC records "total risk weighted assets" rose from $44.5 million to $56.6 million although Tier 1 risk-based capital ratio was rated a healthy: 12.61%. It should be noted long-term assets (5+years) rose from $18.9 million December 31, 2009 to $40.2 million and may be one of the main reasons for the bank closure as the rest of the numbers appear quite satisfactory.

As of December 31, 2010, The First National Bank of Davis had approximately $90.2 million in total assets and $68.3 million in total deposits. In addition to paying a premium of 7.5% to assume all of the deposits of the failed bank, The Pauls Valley National Bank agreed to purchase approximately $28.5 million of The First National Bank of Davis' assets. The FDIC will retain the remaining assets for later disposition.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $26.5 million.
http://www.fdic.gov/news/news/press/2011/pr11054.html
 


(mug shot: Essex County Corrections Facility)

Charles K. Schwartz President of Allied Health Care Services, Orange, New Jersey spent both Thanksgiving and Christmas in Essex County Jail, New Jersey, alleged to be the mastermind by the FBI of alleged $87 million in fraud, mostly to leasing companies for equipment that allegedly did not exist.
 

Sun National Bank, Vineyard, New Jersey has a $15 million loan with Allied Health Care Services, Orange, New Jersey. While in work out, it tried to lay off the loan to other banks, while leasing companies who called in for a rating were allegedly not told this or much more.

Charles K. Schwartz personal financial statement given to leasing companies, according to bankruptcy records, show his real estate investment at $4,715,000, Allied Health at $16,990,584 and Evenstar Stables at $1.5 million. The dissolution of the personal and business assets by both the corporate and personal bankruptcy show this as quite an exaggeration.

Sun National Bank at one time has 63 locations throughout New Jersey and the latest March 10, 2011 press release notes it is "more than 60," raised $100 million capital July, 2010, but evidently it may not be enough. Net equity went from $430,356 year-end December 31, 2009 to $$345.8 million year-end December 31, 2010. Noncurrent loans went from 95.8 million to $173 million in the same time period as long-term assets (5+years) jumped from $517.4 million to $1.47 billion.

The bank lost $14.3 million December 31, 2009. The bank lost $182.8 million December 31, 2010, following $$79.7 million in charge offices ($45.4 million secured by nonfarm nonresidential property, $8.5 million secured by 1-4 family million properties, $8.8 million construction and land development, $1 million in other loans, with $14.5 million in commercial and industrial loans ($10.5 million in 2009).

Tier 1 risk-based capital ratio 10.89%
 


On Twitter @TomGeisel following 210 and with 123 followers
 

Thomas X. Geisel has been president and CEO of the bank since 2008 and has replaced officers, including key credit officers. He comes from Key Corp where in 1999 he served as Managing Director of Investment Banking for the East and West Regions of KeyBanc Capital Markets…

The Sun National bank $100 million infusion of capital announced July 7, 2010 included billionaire Wilbur Ross, who now owns a 25 percent interest in the bank, as he invested $50 million, the Brown family contributed $30 million and other investors contributed $20 million.

Bernard A. Brown, 84, has been Sun’s chairman of board since its inception in January 1985. Directors Ike Brown, Sidney R. Brown, Anne E. Koons and Jeffrey S. Brown are his children. Brown also chairs NFI, a trucking conglomerate based in Vineland. Sidney Brown, 52, serves as Sun’s vice chairman and CEO of NFI.


 

10 E. Evesham Rd. Glendora 08029

 

The bank was recently selected by the Gloucester Township Economic Development Corporation as the recipient for its annual Economic Development Award. The Glendora Branch: "3,200 square-foot solar-powered building operates as a full-service bank branch, open seven days each week…The branch features two drive-through lanes and an Automated Teller Machine (ATM) lane, in addition to a night depository and safe deposit boxes. Additionally, the bank provided the community with a sign in front of the branch at the corner of Evesham Road and Black Horse Pike, which welcomes residents to Gloucester Township."

Tracking Bank Failures Map:
http://graphicsweb.wsj.com/documents/Failed-US-Banks.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