Citing Subprime Mortgages, FDIC Shuts Bank

Miami Valley Bank was cited by federal regulators for purchasing poor-quality subprime mortgages before they closed the Lakeview, Ohio, bank Oct. 4 and placed it in receivership.The bank had $86.7 million in total assets when it failed, including nearly $30 million in subprime mortgages, according to the Federal Deposit Insurance Corp. In April, the FDIC ordered the bank to reverse a purchase of $7 million in mortgages from affiliate MVB Mortgage Corp., Southfield, Mich. The temporary cease-and-desist order said the bank's mortgage activities were "likely to cause insolvency or significant dissipation of assets or earnings." The FDIC also fined a former owner of the bank. The Citizens Banking Co., based in Sandusky, Ohio, paid a 2% premium for the $62 million in insured deposits. The failed bank had $14 million in uninsured deposits, and the depositors will become creditors of the receivership. The FDIC has retained all the assets of failed bank.