Another local bank has failed. Integrity bank was closed by the FDIC on Friday and bought out by Regions Bank. The last one in Alpharetta was NetBank last year.
NEW YORK: Integrity Bank of Alpharetta became the 10th US bank to fail so far this year, done in by the very business it was built on – real estate lending.
Regions Bank of Birmingham, Alabama, is assuming all of the Alpharetta, Georgia, banks’ $974 million in insured and uninsured deposits in 23,000 accounts, and about $34.4m of the bank’s $1.1 billion in assets.
The remainder of Integrity Bank’s total assets are being retained by the Federal Deposit Insurance Corporation (FDIC).
The FDIC said it estimates that Integrity’s failure will cost its deposit insurance fund $250m to $350m.
Integrity Bank, which opened for business in November of 2000, specialised in real estate lending in the Atlanta area with a self-described “faith-based culture.”
Through the early part of the decade, when the housing market was booming, Integrity Bank grew into a billion-dollar, publicly traded company. But when the real estate market started faltering, the bank found itself in trouble.
The bank fired its chief executive in August last year, nabbed a turnaround expert in September, only to voluntarily delist from the Nasdaq market in March.
FDIC spokesman Rickey McCullough said the bank failed due to its aggressive pursuit of construction loans, coupled with falling real estate values and “inadequate risk management.”
Construction loans comprised 76 per cent of the bank’s total loan portfolio. During the quarter ending June 30, the bank posted a net loss of $33.56m.
Housing loan crisis hits US bank
Links:
Integrity Bank
Failed Bank Information for Integrity Bank, Alpharetta, GA
FDIC Failed Bank List
FDIC Press Release
How bank failures happen and what they mean
Why Do Banks Fail on Fridays?