Regulators Shut 16th Bank, 3rd In Month Of October

Regulators seized two-year-old Alpha Bank & Trust based in suburban Atlanta, marking the second Georgia institution to be shuttered within 60 days and the 16th lender to fail nationwide this year.

The Georgia Department of Banking and Finance shut Alpha Bank & Trust, a three-branch institution based in Alpharetta, Ga., on Friday, Oct. 24, and immediately named the Federal Deposit Insurance Corp as the receiver to oversee the disposition of the $354 million in assets institution.

“The transaction is the least costly resolution option, and the FDIC estimates that the cost to its Deposit Insurance Fund will be $158.1 million,” according to an FDIC statement.

In preparation of the seizure, Stearns Bank, a St. Cloud, Minn.-based institution with $1.03 billion in assets, agreed with the FDIC to purchase Alpha Bank’s $346 million in insured deposits and nearly $39 million in assets.

Stearns Bank is a 96-year-old national association that operates three locations in Minnesota and one branch in Scottsdale, Ariz. This will be the bank’s first presence in Georgia.

The FDIC plans to dispose of the remaining assets and liabilities in the upcoming months.

Created in May 2006, Alpha Bank & Trust had three locations in the Greater Atlanta area and loans of $306 million on June 30, according to the most recent FDIC data.

In the first half of 2008 ending June 30, Alpha Bank & Trust lost -$6.8 million compared to a profit of $243,000 in 2007.

Before Alpha Bank & Trust’s failure, the institution had a noncurrent loans-to-loans ratio of 18.36 percent due to a spike in nonperforming real estate construction and development financing.

Integrity Bank, also based in Alpharetta, was the other Georgia institution to be seized by regulators this year.

Alpha Bank & Trust’s failure marks the third institution to be shut in the fourth quarter, pushing the total estimated FDIC loss since October 1 to $204 million.

Nine institutions were shuttered in the third quarter at an estimated cost of between $5.7 billion and $10 billion, according to the FDIC.

Regulators shut two institutions in the second quarter at an estimated cost of $216 million and two more institutions in the first quarter at an expense of nearly $6 million, according to the FDIC, which insures deposits up to a newly increased amount of $250,000.

The deposit insurance amount was raised from $100,000 through the end of 2009 with the recent passage of the $700 billion federal bailout package officially known as the Emergency Economic Stabilization Act of 2008. The bailout program is also being referred to as the Troubled Assets Relief Program, or TARP.

Wachovia Bank, a $782 billion in assets institution based in North Carolina, avoided also being shuttered by regulators in the third quarter only when the North Carolina-based organization was able to reach a deal to be acquired.

At first Citigroup, which operates the $1.3 trillion in assets Citibank institution, was the announced suitor, but Wells Fargo Bank ultimately was the highest bidder for the Wachovia franchise.

The bank failures have been scattered throughout the United States. California, Nevada, Georgia, and Missouri lead the nation in failed institutions with two banks each. Florida, Arkansas, Minnesota, Kansas, West Virginia, Washington state, Michigan and Illinois each have had one institution shuttered this year.

Before Alpha Bank & Trust’s failure, the last time regulators seized an inistitution was on Oct. 10 when two Midwest banks were closed.

Main Street Bank, a $98 million in assets institution based in Northville, Mich., and Meridian Bank, a $39 million in assets institution headquartered in Eldred, Ill., were the 14th and 15th institutions, respectively to be closed by regulators in 2008.

In the first 24 days of the fourth quarter, regulators are on pace to shut an institution once every eight days. In the third quarter, regulators seized a bank once every 10 calendar days.

Prior to the seizure of Main Street and Meridian banks, the last institutions to be shut by regulators was Washington Mutual Bank on Sept. 25.

A week earlier on Sept. 19, regulators shut down Ameribank Inc., a 102-year-old community bank based in West Virginia with links to Florida.

Prior to the Ameribank’s closure, Silver State Bank in the Las Vegas suburb of Henderson was the last institution to be shut, that occurring on Sept. 5. Silver State Bank was the second Nevada institution to fail this year.

In July, banking regulators shut down the First National Bank of Nevada in Reno, which along with the First Heritage Bank in Newport Beach, Calif., was owned by First National Bank Holding Co. in Scottsdale, Ariz.

A host of other banks are being closely monitored by industry watchers who anticipate further failures this year, especially in Sun Belt states where the housing crisis has hit hardest.

Before regulators shuttered Ameribank and Silver State Bank, the focus of examiners was on Greater Atlanta-based Integrity Bank, a $1.1 billion in assets institution that was shut on Aug. 29.

Working down the list of failed lenders, regulators seized Columbian Bank and Trust Co., a $752 million in assets institution based in Topeka, Kansas, on Aug. 22.

Three weeks earlier on Aug. 1, regulators shut First Priority Bank of Bradenton, a six branch institution with $261 million in assets located on the state’s west coast.

First Priority’s closing marked the first Florida institution to be closed by regulators in more than four years.

On July 11, federal regulators shut down IndyMac Bank, a $32 billion institution based in Pasadena, Calif. The estimate cost of that seizure is between $4 billion and $8 billion, according to the FDIC.

Before IndyMac, regulators seized Minnesota-based First Integrity Bank with $54.7 million in total assets and $50.3 million in total deposits on May 30; Arkansas-based ANB Financial with $2.1 billion in total assets and $1.8 billion in total deposits on May 9; Missouri-based Hume Bank with total assets of $18.7 million and total deposits of $13.6 million on March 7; and Missouri-based Douglas National Bank with $58.5 million in total assets and $53.8 million in total deposits on January 25, according to the FDIC.

Peter Zalewski is a principal with the consulting company Condo Vultures® LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter’s blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ .

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