10: Georgia's Integrity Bank Fails
The state of Georgia now has its second bank failure in the past year, after the 2007 failure of NetBank. Integrity Bank, based in Alpharetta, Georgia, was closed Friday afternoon by the Georgia Department of Banking and Finance, with the Federal Deposit Insurance Corp. named reciever. The bank had $1.1 billion in total assets and $974.0 million in total deposits as of June 30, the FDIC said. Birmingham, Alabama-based Regions Bank will assume all deposits, including those in excess of the FDIC's $100,000 insurance limit. The failed bank's five branches will reopen Tuesday as branches of Regions Bank, the FDIC said in a statement. Regions is the nation's 12th-largest bank by assets. Regions Bank has agreed to pay a total premium of 1.012 percent for the failed bank's deposits; Regions will also purchase approximately $34.4 million of Integrity Bank's assets, consisting of cash and cash equivalents. The FDIC said that the cost to its deposit insurance fund will be between $250 million and $350 million. Integrity had already been under regulatory scrutiny, due to a concentration of real estate development loans to a single developer based in Florida. The Wall Street Journal reported earlier Friday that almost 50 percent of Integrity's $668.4 million in construction loans were nonperforming at the end of Q2; the bank also made 14 loans for a total of $83 million to one borrower; that amount represented almost all of the bank's available capital early last year, the Journal reported, and all 14 loans are now in default. Earlier this week, the FDIC said it had raised it its estimate of troubled banks to 117, up from 90 at the end of the first quarter. HW's sources have suggested in recent weeks that the banking regulator is expecting more than 800 banks to fail as a result of the current credit crisis. For more information, visit http://www.fdic.gov.