Six banks in four states met their demise and two new banks were chartered in their ashes in perhaps the busiest night the Federal Deposit Insurance Corp. has had so far in 2011.
The $3 billion-asset Superior Bank in Birmingham, Ala., shuttered by the Office of Thrift Supervision, was the biggest bank to fail. Also in Birmingham, the $793.7 million-asset Nexity Bank, a correspondent bank, was closed by the State of Alabama Banking Department.
The Mississippi Department of Banking and Consumer Finance failed the $224 million-asset Heritage Banking Group in Carthage. The Georgia Department of Banking and Finance closed the $110.7 million-asset New Horizons Bank in East Ellijay and the $330.2 million-asset Bartow County Bank in Cartersville on Friday.
The Office of the Comptroller of the Currency closed the $37.6 million-asset Rosemount National Bank in Minnesota.
The failures, which take the yearly tally to 34, held a collective $4.49 billion in assets and are expected to cost the Deposit Insurance Fund $588.1 million.
The FDIC sold essentially all of Superior's assets to a newly chartered unit of Community Bancorp LLC in Houston, which was named Superior Bank. The new bank also agreed to assume the thrift's $2.7 billion in deposits and entered into a loss-sharing agreement with the FDIC on $1.84 billion of the thrift's assets.
Superior Bank's failure is expected to cost the Deposit Insurance Fund $259.6 million. Its parent had tried to recapitalize the thrift by filing a $58 million claim against the Gulf Coast Claims Facility, a fund created by the oil company BP Plc to cover damages caused by the Deepwater Horizon oil spill, because it said the spill created additional stresses on its portfolio.
Community Bancorp is a bank holding company that raised $1 billion last year to invest in community banks. Earlier this year it purchased Cadence Financial Corp. of Starkville, Miss. With the two deals, Community Bancorp has 111 branches and $4.5 billion in assets.
Nexity Bank, which specialized in correspondent and internet banking, also sold to a newly chartered bank, AloStar Bank of Commerce in Birmingham.
AloStar agreed to assume all of Nexity's $637.8 million in deposits and all of its assets. The FDIC and AloStar entered into a loss-sharing agreement on $384.2 million of Nexity's assets. That failure is expected to cost $175.4 million. The last FDIC-insured institution closed in Alabama was First Lowndes Bank in Fort Deposit, on March 19, 2010.
Nexity Financial Corp., the failed bank's holding company, filed for Chapter 11 bankruptcy protection in July 2010 in an effort to recapitalize its troubled bank.
AloStar's leaders are Michael Gillfillan, a former chief credit officer and vice chairman of Wells Fargo & Co., and Andrew McGhee, a co-founder of Archway Equity Partners, an Atlanta private-equity firm. In a press release, the executives said they would continue Nexity's mission of providing correspondent banking services to community banks.
In a brief interview, Gillfillan said that AloStar's charter was approved shortly before Nexity's failure. The new state-chartered bank is backed by four private-equity firms: Fortress Investment Group LLC, Stone Point Capital, Oaktree Capital Management and Pine Brook Road Partners.
In Mississippi, the $9.3 billion-asset Trustmark National Bank in Jackson agreed to pay a 0.15% premium on Heritage's $196.2 million of deposits. Trustmark also agreed to buy all of Heritage's assets, with $156.4 million of those covered by a loss-sharing agreement with the FDIC. Heritage's failure is expected to cost $49.1 million.
Citizens South Bank in Gastonia, N.C., agreed to assume all of New Horizon's $106.1 million in deposits, at a 1% premium. Citizens also agreed to purchase essentially all of New Horizon's assets, and the FDIC agreed to share in the losses on $84.7 million of the portfolio. That failure is expected to cost the Deposit Insurance Fund $30.9 million.
Hamilton State Bank in Hoschton, Ga., agreed to assume all of Bartow County's $304.1 million in deposits, paying a 1% premium. Hamilton also agreed to buy all of the banks assets, with the FDIC agreeing to share in losses on $247.5 million of the portfolio. That failure is expected to cost $69.5 million.
Finally, the FDIC sold Rosemount National's assets to Central Bank in Stillwater, Minn., which also agreed to assume the bank's $36.6 million of deposits. Rosemount's failure is expected to cost $3.6 million.
