SLIDESHOW: See photos of the seizure/closure of Centennial Bank
OGDEN -- The state of Utah shut down Centennial Bank at 6 p.m. Friday, handing all of its assets over to the Federal Deposit Insurance Corporation for liquidation.
Paul Allred, deputy commissioner of the state Department of Financial Institutions, said no bank could be found to take over Centennial.
As a result, "This is a payout," he said. That means all accounts are closed and will be paid out to depositors to the maximum $250,000 of FDIC insurance. The bank's assets will be liquidated.
Centennial is a state-chartered bank with five branches, in Ogden, Layton, Clinton, South Jordan and Orem. It was established in 1997 by local investors to specialize in construction and real estate loans.
Business looked normal Friday afternoon at the bank's main branch at 4605 Harrison Blvd., Ogden, with the occasional customer using the drive-up teller or walking into the lobby to conduct business.
Minutes after 6 p.m., half a dozen Utah Highway Patrol cars converged on the bank. The patrolmen entered the lobby and established security. They were followed by dozens of FDIC employees, wheeling in suitcases and carrying plastic bins full of equipment to handle the shutdown.
No officials from Centennial Bank could be reached for comment Friday evening.
No prior public announcement of the closure was made, which is standard practice by the FDIC to avoid a run on the bank.
At 5:45 p.m., employees stood around the lobby, quietly talking. Asked about what might be happening, one said, "We'll see," and said a media spokesman would come out after 6 p.m.
The closure came after months of uncertainty and statements of confidence by officials of the bank. Because Centennial specialized in construction loans, it was hit hard by the economic slowdown, which was centered on the housing industry.
Last June, the FDIC and Centennial entered into an agreement and the bank was ordered to improve its financial position.
Court papers at that time said the agreement and order were based on an FDIC "Report of Examination" issued in October 2008 that found Centennial had a large volume of poor-quality loans, needed to improve its operating practices and needed to acquire more capital, which is money on hand to cover potential losses.
In January, Centennial announced it was close to a joint venture with Orem-based Vision Bankcard, a financial services company. Centennial hoped the joint venture would help it recapitalize as well as expand its services.
Before close of business Friday, windows at Centennial Bank were still displaying posters advertising the joint venture. Large type on the posters read "Bright Future."
Shortly after 6 p.m., Richard A. Schmalzer, regional ombudsman for the FDIC, peeled one of those off the bank's front door. It was taped right next to the notice from state regulators that the bank had been shut down.
Centennial had said in January that the joint venture had closed in escrow and was waiting for regulatory approval.
But Schmalzer said the venture never went through.
Allred said the bank was insolvent. He said the state went to 2nd District Court in Ogden on Friday afternoon and obtained an order "to take possession of the institution due to insolvency."
Schmalzer said he didn't have details, but said "essentially the bank had considerable losses on ADC (acquisition, development and construction) loans."
Centennial was a state-chartered bank, and after it failed to bring in more money to boost its finances with a joint venture, it was up to Utah to shut it down.
An FDIC news release Friday announcing the closure said that, as of Dec. 31, 2009, "Centennial Bank had approximately $215.2 million in total assets and $205.1 million in total deposits. At the time of closing, the bank had an estimated $1.8 million in uninsured funds. This amount is an estimate that is likely to change once the FDIC obtains additional information from these customers."
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SLIDESHOW: See photos of the seizure/closure of Centennial Bank
OGDEN -- Centennial Bank was closed today by the Utah Department of Financial Institutions, which appointed the FDIC as receiver.
Zions First National Bank will accept the failed bank's direct deposits from the federal government, such as Social Security and Veterans' payments under an agreement with the Federal Deposit Insurance Coporation.
Regulators could not find another financial institution to take over Centennial's banking operations.
Checks to retail depositors for their insured funds will be mailed on Monday, the FDIC said in a prepared statement.
As of Dec. 31, 2009, Centennial Bank had approximately $215.2 million in total assets and $205.1 million in total deposits. At the time of closing, the bank had an estimated $1.8 million in uninsured funds. This amount is an estimate that is likely to change once the FDIC obtains additional information from these customers.
Centennial Bank is the 26th FDIC-insured institution to fail this year and the second in Utah since Barnes Banking Company, Kaysville, was closed on Jan. The FDIC estimates the cost of the failure to its Deposit Insurance Fund to be approximately $96.3 million.
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