Integrity Bank of Alpharetta, Ga., was closed by U.S. regulators Friday, the 10th bank to collapse this year amid a surge in soured real-estate loans stemming from the worst housing slump since the Depression.
Integrity Bank, with $1.1 billion in assets and $974 million in deposits, was shuttered by the Georgia Department of Banking and Finance and the Federal Deposit Insurance Corp.
Regions Financial Corp., Alabama's biggest bank, will assume all deposits from Integrity, which was run by Integrity Bancshares Inc. The failed bank's five offices will open Tuesday as branches of Regions, the FDIC said.
“Depositors will continue to be insured with Regions Bank so there is no need for customers to change their banking relationship to retain their deposit insurance,” the FDIC said.
Banks are being closed at the fastest pace in 14 years as financial companies report more than $505 billion in writedowns and credit losses since 2007. California lender IndyMac Bancorp Inc., which had $32 billion in assets, was closed July 11 in the third-largest bank seizure, contributing to a 14 percent drop in the U.S. deposit insurance fund that had $45.2billion at the end of the second quarter.
Regions will buy about $34.4million in assets and will pay the FDIC a premium of 1.01 percent to assume the failed bank's deposits, the FDIC said. The FDIC estimates the cost of the Integrity failure to its deposit-insurance fund will be $250 million to $300 million.
Integrity was ordered by federal and state regulators in May to present a capital-raising plan within 60 days. At the time, the company had been trying without success for at least eight months to raise $40million after loans to residential and commercial developers were hurt by the collapse of the real estate market.
“Banks must meet certain regulatory minimums to ensure safety and soundness,” Georgia bank commissioner Rob Braswell said in a telephone interview. “When those minimums are not able to be met and solvency is in jeopardy, we have no choice but to close the institution and to place it into receivership.”
Integrity Bancshares, which sold for more than $14 a share in January 2007, closed Friday at 4 cents in over-the-counter trading.
This week, the FDIC said 117 banks were classified as “problem” in the second quarter, a 30 percent jump from the first quarter. The agency doesn't identify “problem” lenders.
“More banks will come on the list as credit problems worsen,” FDIC Chairman Sheila Bair said at Washington news conference Tuesday.