Saturday, March 06, 2010

Standard-Examiner: State Shuts Down Centennial Bank

We'll definitely be keeping a close eye on Centennial Bank asset liquidation, as bank regulators sort out performing and non-performing properties and loans

There's blockbuster news within the Emerald City banking community this morning, as we find this Great Depression era-style headline splashed across the top of the Standard-Examiner hard-copy edition front page. Be sure to read today's Std-Ex writeup, folks:
State closes Ogden-based Centennial Bank
In the comment section under our WCF article of earlier this week, wherein we discussed Ogden City's belated action to place liens on eight Gadi Leshem-controlled River Project properties (which had been earlier demolished on the taxpayers' dime by Ogden City wrecking crews,) the seemingly prescient gentle reader Ozboy offered these queries:
Given the arrogant and in your face corruption of the Godfrey gang, especially as it pertains to favoritism and cronyism toward Gadi and other FOM's, I wonder if this "oversight" is now being reported because some one discovered it, and it was going to become public knowledge anyway? Was this article some sort of damage control to cut the legs out from under another scandalous story?
Yesiree, gentle readers, now that we're able to connect the dots with this morning's twenty-twenty hindsight, it appears that somebody slipped the Godfrey administration the word that bank regulators would be locking Centennial's doors on Friday, so that an otherwise asleep-at the-wheel Boss Godfrey administration could get to work perfecting the taxpayers' as yet unperfected senior lien interests, in advance of story's appearance in the public press this morning.

And what will be the net consequences of this bank take over? Aside from the extreme inconvenience which will be wreaked up CB depositors and other customers (bounced checks, useless atm/debit cards, temporarily unavailable funds, revoked lines of credit, etc.)... probably not much for the average bank customer, at least in the long-run. In the wake of the massive American bank takeovers during the last several years (140 as of mid-December 2009), bank regulators have developed a pretty effective methodology for this. Depositors' funds will be mailed with checks, direct deposits of federal monies will be handled by Zions Bank, etc. And of course, CB assets will be methodically liquidated.

In connection with the asset liquidation aspect, and other possible long-term consequences, here's the tantalizing part. At the foot of this morning's Std-Ex story we find this interesting quote from Richard A. Schmalzer, regional ombudsman for the FDIC, speaking to the issue of Centennial Bank's insolvency:
Schmalzer said he didn't have details, but said "essentially the bank had considerable losses on ADC (acquisition, development and construction) loans."
As regular WCF readers are already aware, the now-defunct Centennial Bank owned many of the loans and much of the security paper involved in Ogden's River Project. And as we learned from the Standard-Examiner on April 21, 2009, Centennial was also listed on Weber County property records as a co-owner, along with the mysterious Gadi-controlled Ogden Riverfront Development Company, of the eight properties which were demolished in April 2009 by Ogden City, at the very least. Whether its fair to speculate at this juncture that Centennial was up to its financial eyeballs in the River Project, or whether River Project loans were among those contributing to "considerable losses on ADC" we don't know; but we'll lay odds we will find out.

We'll definitely be keeping a close eye on the Centennial Bank asset liquidation process, as bank regulators scour Centennial's asset portfolio and sort out and differentiate performing and non-performing properties and loans. We believe the now ongoing asset liquidation will add much-needed public transparency to the details surrounding the existing financing, such as it is, for the River Project. And who knows, perhaps some heretofore unrevealed individual investor identities will be shaken out in the process. And if that happens, we'll probably be able to connect even more dots.

That's it for now.

Don't hesitate to chime in, folks!

Update 3/7/10 9:45 a.m.: For the benefit of Centennial Bank depositors and customers who may be experiencing heartburn this weekend, here's a link to the newly-posted FDIC information page, which provides a full slate of information regarding the bank's dissolution:
Failed Bank Information - Centennial Bank, Ogden, UT


althepal said...

Here's my quick observation. If the demolition lien had been placed on the 8 properties earlier, Centennial Bank would have been put on public notice that it had a problem with the underlying loan, and bank examiners would have also been aware of it during routine examinations.

Look for a connection between the Godfrey administration's "inadvertant" failure to file, and Centennial's insider knowledge about the condition of the pending lien. If bank officers had knowledge of this pending charge against the properties, and Godfrey Administration intentionally failed to file the lien in cooperation with the bank, and with the intent to conceal it from bank examiners, both the bank officers and the Godfrey Administration have a very big problem.

Curmudgeon said...


A correction. The prescient queries you quoted above are from Oz.

RudiZink said...

Thanks for the correction, Curm; Our apoligies to Ozboy.

Curmudgeon said...


First, thanks for noting the Centennial Bank/ River Project connection. I never would have noticed that otherwise.

Second: you wrote "And what will be the net consequences of this bank take over?... probably not much for the average bank customer, at least in the long-run.... Depositors' funds will be mailed with checks, direct deposits of federal monies will be handled by Zions Bank, etc.

Be worth reminding folks here in benighted Utah that the reason nearly all the depositors in the failed Centennial Bank will be getting nearly all their money back is because of the New Deal created Federal Deposit Insurance Corporation [via the 1933 Glass-Steagall Act], through which the feds insure deposits up to $250K. When the Great Crash wiped out hundreds of banks in the great depression, they took all their depositors cash down with them. If you had money in a failed bank then, it was gone. Kaput. Vanished. FDR and the New Deal, often denounced as a socialist dictatorship in these parts, created the FDIC so that ordinary working Americans would no longer lose their life savings when their local bank engaged in risky loans and collapsed.

Just thought a timely reminder might not be amiss. Of course the Glass-Steagall Act also contained provisions to limit speculative investment by banks, which restrictions were removed at the behest of Republican Senator Phill Gramm and his happy band of "get the government off the backs of business" gang, leading to precisely the melt down we are suffering through now. And naturally, attempts in Congress to resort the prohibition on speculative ventures by banks to prevent another meltdown [strongly advocated by Republican treasury secretaries of previous administrations] are being attacked as unreasonable restrictions on the banks. We never learn... or at least some of us don't.

But all those depositors of Centennial Bank who will be getting checks from the FDIC next week should offer up a small --- or maybe no so small --- prayer of thanks for FDR and the New Deal.

unbelievable! said...

Well, I would be willing to bet that Gadi and company are one of the biggest reasons for the failure of the bank. They were in trouble for the past two years as was the crooked gadi in California for his failure to pay proper withholding taxes. And it was reported in the paper last year that holders of the properties in the development was listed as Centenial Bank.
Rudi, I think we have seen the connection of the dots, more Godfrey horseshit as the ever wizardly Ozboy suggests.
It makes on wonder just how far of a reach does the Godfrey Gaggle's tentacles really do have.

Jim Hutchins said...

A great historian will one day write the story of Elbert Bennett and Marriner Eccles, both sons of Ogden, Utah and board members of First Security Bank who helped right the financial ship of state during the Great Depression.

Eccles' role is well-known, and according to some accounts, he was no friend of the FDIC. Elbert Bennett is less well-known but helped establish the FDIC in 1934.

I find it passing strange that Utahns were called upon during the Great Depression to set things right. Despite deep philosophical differences with President Roosevelt, Eccles and Bennett did what was needful. During the Great Recession, many Utahns are unpatriotic enough to openly wish for the failure of President Obama. It's shameful, really, how much the level of political discourse has deteriorated over 70 years.

Jim Hutchins said...

I meant to say I find it passing strange how modern Utahns are refusing to help President Obama.

OneWhoKnows said...

It wouldn't surprise many of us to find Godfrey involved in improper behavior in banking too. Maybe this could be the final straw that will remove him from power earlier than expected. He could get a room with Val Southwick and Wayne Ogden at the High Adventure Point Of The Mountain? Please.

Danny said...

I don't wish for the failure of Obama or the gummint, any more than I wish for a sunny or rainy day.

But I make predictions and act accordingly.

My prediction is Obama is and will be a dismal failure, and that the US gummint will in coming years be drastically raising taxes and cutting spending as Greece is having to do and as every other mismanaged entity must eventually do.

The financial abyss still lies ahead.

I wish I could also predict Godfrey will go to jail. I think he should. But my prediction is that he won't.

Monotreme said...

Centennial Bank is in the same building as Helgeson, Waterfall and Jones: 4605 S Harrison Blvd.

Scott Waterfall is the recently departed head of Ogden City Community and Economic Development Department.

Coincidence? Yes, in the same way that Blain Johnson and FNURE shared the same address.

Monotreme said...

The "Own in Ogden" program is run through the city's Community and Economic Development department.

Own in Ogden is funded by the Federal Home Loan Bank (FHLB). FHLB funds are protected from FDIC action by a "super-lien".

There are two more dots for you. What I don't know (yet) is if any of the River Project properties were mortgaged through the FHLB.

mark my words said...

Here's clue, WCF gentle readers. The whole River Project remains propped up by a very few irresonsposible real estate lenders. Centennial Bank was the first to fall.

There will be others.

OgdenLover said...

Does anyone know who is/was on the BOD of Centennial?

blake fowers said...

so much for the state being the best at management, when you have banks failing.

Curmudgeon said...

Probably not wise to assume, at this point, that River Project involvement played a significant role in Centennial's demise. As Rudi notes, we don't know if the loans it made on River Project properties ended up as non-performing loans or not. Certainly possible. But we'll have to wait to learn more before we know.

In any case, as I recall from stories in the last five weeks or so on troubled Utah banks the Fed was keeping an eye on, Centennial's ratio of problem loans to capital reserves was the worst among the troubled Utah banks. [Troubled banks the Fed watches have a ratio of problem loans to capital reserves to offset them of more than 100%. Centennial's ration was 338%.]

Even if its River Project loans were non-performing, they were likely not large enough, by themselves, to have brought Centennial down.

But we'll have to wait for specifics.

Machster said...

Centennial Bank was also reportedly involved in highly questionable loans to a local unscrupulous Real Estate guy.

He used a buddy to appraise properties at three to four times their actual values. And managed to make bogus offers for sales using another old friend to hype even higher bogus values.

The twelve properties all eventually ended up in foreclosure but the damage done to Huntsville Town properties via the outrageous County Tax Assessor valuations was already done. Ninety year old widows in 850 sq. ft. hovels were suddenly worth $350K.

Monotreme said...


You must've mis-read my post.

I didn't say the River Project loans were a significant part of the Centennial Bank failure.

I said that they filed the liens so that they would be first in line to be paid. FHLB liens take first priority, even over "regular" mortgage lenders.

Curmudgeon said...


Read "Unbelievable's" post above.

Danny said...

Here is a good video.

It could have been produced by Goldman Sachs, aka the US Treasury.

Your Investment Advisor

Danny said...

And for something not funny, and completely honest and up to date . . .

Elizabeth Warren

(When link opens scroll up to video and click on Warren.)

Troi said...

Usury is theft, and unnecessary in an enlightened society;
Just ask Jean Luc Picard.

Ogden Dem said...

OgdenLover - haven't found the BOD yet but I did find this on the web.
Key Executives
Mr. Clint E. Williams
President and Chief Executive Officer
Mr. Daren Jackson
Loan Officer
Mr. Matt Carter
Loan Officer
Ms. Michelle Loghry
Assistant Vice President
Mr. Scott Woolstenhulme
Loan Officer

Ogden Dem said...

Also found the name R. Scott Priest shown as the Chairman of the Board.

notogdener said...

Good work Ogden Dem. Haven't heard from you in a while. Been out of town?

drewmeister said...

Seems that Centennial has been teetering on the edge for awhile now. They were ordered to boost their capital in June of last year. You'd think that would have kickstarted someone into filing a lien back then..

drewmeister said...

Hmm. Apparently, Scott Waterfall spent four years as Chairman of the Board at Centennial. You'd think having spent nearly half a decade as board chairman and an indeterminate amount of time as a board member, he'd be privy to information about the soundness of a banking institution that the city economic development team was working with on a major project, regardless if he was even on the board at the time. But hey..who knows.

Oh, and if anyone would care for a slice of irony pie, you can dish one up here.

Rob Dawg said...

These little operations aren't really banks.

They're just small, federally-insured betting pools with a loan sharking operation bolted on to the side.

I'm surprised this one even had five offices.

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