Number Twelve: West Virginia’s Ameribank Shut Down by FDIC

Lost in the shuffle of a historic proposal from the Treasury to bail out the financial markets was yet another small bank failure in West Virginia. Ameribank, Inc. was shut down Friday by the Office of Thrift Supervision and placed into Federal Deposit Insurance Corp. hands; the small bank had total assets of $115 million and total deposits of $102 million.

The FDIC said it had entered into purchase and assumption agreements with West Virginia-based Pioneer Community Bank, Inc. to take over deposits and five branches within the state; Ohio-based The Citizens Savings Bank, will take over all of the deposits and three branches within that state. Read the FDIC statement.

But the purchasers will likely not be taking on troubled residential mortgages that helped bring the small bank to its knees. The FDIC said it would retain remaining assets, it said, and the failure is expected to cost the FDIC’s deposit insurance fund $42 million.

You’ll want to do a double-take on that number: consider bank with slightly over $100 million in assets will cost the FDIC $42 million on its failure — and that’s with all branches and deposits (along with the catch-all “other assets”) being bought. It’s pretty clear how many of the bank’s “assets” might have been something other than what their name would seem to suggest.

“The FDIC’s closure of West Virginia’s tiny Ameribank on Friday was not in and of itself terribly important,” said one source, who asked to remain anonymous. “However, it does beg the larger question of what the regulators are waiting for with many of these institutions.”

A thrift financial report dated June 30th for the failed bank showed a total of $80.2 million in gross loans, with $33.13 million of that total in nonaccrual status — nearly all of that nonaccrual total in residential mortgages. In other words, this is a bank failure most probably should have seen coming. And there are plenty of other smaller institutions like this one.

So far, this year, a total of twelve FDIC-insured banks have been closed.