New Century Bank---Community Banks Beware!!!!

Not made public yet but in the end it will come out: the reason for

this bank failure. Federal Reserve Board action of February 10, 2000.  Paragraph 6:

“ The bank shall not, without the prior written approval of the Reserve Bank, originate or acquire any lease contracts , other than those for which the Bank is contractually obligated in writing as of the date of this Directive.”

 New Century Bank was allegedly formed by the owners of The Bancorp Group and the lease portfolio of The Bancorp Group was transferred to New Century Bank as soon as the bank opened.  Within a matter of weeks the bank auditors declared that the leasing portfolio did not meet their minimum standards

and mandated that the majority be charged off.  Things got ugly between the actual bank officers and the Bancorp people, a reliable source told Leasing News.  This was reportedly crippling.

The bank was attempting to sell the remainder of the leases but hadn't found any takers. “

There has been a trend for lessors and discounters to apply to community

and regional banks.  For thirty years, or longer, RMA-The Risk Management Association ( formerly the Robert Morris Association ) has consistently put equipment leasing and financing of personal property in the high risk arena.  ***

The Bancorp Group and the lease portfolio of The Bancorp Group was transferred to New Century Bank as soon as the bank opened.  Within a matter of weeks the bank auditors declared that the leasing portfolio did not meet their minimum standards and mandated that the majority be charged off.  Things got ugly between the actual bank officers and the Bancorp people.  This was crippling.

The bank was attempting to sell the remainder of the leases but hadn't found any takers. “

Macomb County bank taken over by FDIC

SHELBY TOWNSHIP, Mich. (AP) -- New Century Bank has been taken over by the Federal Deposit Insurance Corp.

New Century, which is located in this Macomb County community, is the eighth bank in Michigan to fail since 1970 and the first since 1998, FDIC spokeswoman Roberta Valdez  stated.

The bank failed because it didn't have the proper level of capital, Valdez told The Detroit News.

Depositors are insured for up to $100,000 in each account. Seventeen of those depositors have money in the bank that is in excess of $100,000, she said. Anything more than $100,000 in an account could be paid back to depositors in increments, after assets are liquidated.

Depositors with accounts of up to $100,000 will be paid fully by check for each account. .

New Century has $19 million in assets and $18 million in deposits owed to 311 people.

On March 28, 2002, New Century Bank, Shelby Township, Michigan was closed by the Michigan Commissioner of the Office of Financial and Insurance Services.  The Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

The FDIC has assembled useful information regarding your relationship with this institution. Besides a checking account, you may have Certificates of Deposit, a car loan, a business checking account, a commercial loan, a Social Security direct deposit, and other relationships with the institution. The FDIC has compiled the following information which should answer many of your questions.

Bank fails in Shelby Township
Federal agency closes New Century, seizes control due to lack of sufficient capital

By Hawke Fracassa / The Detroit News

   SHELBY TOWNSHIP -- New Century Bank was shut, placed in receivership and taken  by the Federal Deposit Insurance Corp., freezing depositors' money until next week.
   The bank on Hayes failed because it didn't have the proper level of capital, FDIC spokeswoman Roberta Valdez said.
   "(New Century) was operating under unsafe and unsound conditions," she said.
   The 3-year-old bank's 18 employees are being retained by the receivership until further notice, Valdez said.
   Bank board chairman Vincent DiLorenzo of Rochester could not be reached late Thursday night for comment.
   Depositors with accounts of up to $100,000 will be paid fully by check for each account. The money will be mailed Saturday by the FDIC and cannot be picked up in person, Valdez said.
   The FDIC tried to sell the bank and to have other banks take it over for a few months, but there were no takers, Valdez said, "because the (interest rates on) deposits were too high."
   "The FDIC marketed this institution and nobody was interested," she said.
   Valdez said New Century Bank was paying up to 6.9 percent interest for certificates of deposit, considerably higher than the Detroit average for five-year certificate of deposit, which is 4.56 percent. That made it a liability for any bank that would have inherited those rates.
   Depositors are insured for up to $100,000 in each account. Seventeen of those depositors have money in the bank that is in excess of $100,000, Valdez said.
   Anything past $100,000 in an account could be paid back to depositors in increments in the form of dividends, after assets are liquidated, she said.
   That could mean refunds in increments of 10 percent or 15 percent at a time, spread out equally over years, Valdez said.
   "Checks for dividends could come six, nine, 12 months later, in portions, for uninsured depositors," Valdez said.
   Individuals can legally hold two $100,000 accounts per bank. The rules are different if accounts are intermingled with others.
   New Century has $19 million in assets and $18 million in deposits owed to 311 people and entities.
   New Century, wholly owned by New Century Bancorp. Inc., was the first to close since 1998.
   The last bank failure in Michigan was OmniBank of River Rouge, which closed on April 9, 1998.
   

You can reach Hawke Fracassa at (313) 222-2320 or mailto:hfracassa@detnews.com

Leasing News is attempting to obtain more information from the State of Michigan

Bank Commission. The Federal Deposit Insurance Corporation has directed us

to the appropriate person.

While there is a trend for lessors and discounter to approach community and

regional banks. equipment leasing is a very difficult industry, as evidenced

by the Leasing News List: