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OGDEN, Utah (AP) -- Federal officials spent the weekend sifting through the accounts of Ogden-based Centennial Bank, which was shut down by regulators Friday.
Federal Deposit Insurance Corp. ombudsman Richard Schmalzer blamed the bank's failure primarily on bad loans during the real estate market's downward slide. He said the bank incurred "significant losses" in acquisition, development and construction.
"Centennial Bank was identified (by FDIC) as a problem bank for more than a year," Schmalzer said.
Twenty-five other banks have failed this year in the United States. Last year, 140 banks were brought down by mounting loan defaults and the recession.
Centennial was shuttered by state regulators Friday and handed over to the FDIC.
"Our role is to wind down the affairs of the institution," Schmalzer said. "This is not a functioning bank anymore."
Bank employees and federal regulators spent much of Saturday writing insurance checks to depositors. Schmalzer said the checks should go in the mail on Monday.
While most of the bank's accounts are insured, up to $1.8 million in deposits may not be, he said.
"We're in the process of fully identifying which accounts may be uninsured," Schmalzer said. "The ones we need more information on, we'll be in touch with those depositors."
Larry Grant, a senior lending officer with Centennial's Ogden branch, told The Salt Lake Tribune recently that the bank's fortunes began to sour in 2007 when the state's real estate market began a decline.
Howard Headlee, president of the Utah Bankers Association, had held out hope for Centennial. Instead, it became Utah's second community bank this year to go under.
"It's sad that it turned out this way," he said.
The FDIC was unable to find a buyer for Centennial Bank, and it approved the payout of the institution's insured deposits. Zions First National Bank in Salt Lake City agreed to accept the failed bank's direct deposits from the federal government, including Social Security and Veterans' payments.
Utah Department of Financial Institutions Commissioner Ed Leary said the bank's failure may not be the last in Utah.
"Given the state of our economy now, the banks' conditions (leading to failure) were not unexpected," he said. "It is evident to most of the world that we are in a bad economy. (These failures) are just more examples of that."
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Information from: The Salt Lake Tribune
(Copyright 2010 by The Associated Press. All Rights Reserved.)
