Tonight’s failed bank is located in Georgia. The ironically-named Integrity Bank is a “small” bank with offices in five towns that recently had $1.1 billion in assets. Accounts have been transferred to Regions Bank. Regions Bank is paying a 1 percent premium for $34 million in assets.
Integrity Bank was based in Alpharetta, Georgia, and its closure comes 11 months after the failure of cross-town rival NetBank.
Integrity Bank was unable to raise more capital after declining real estate prices hurt its loan portfolio. In particular, according to The Wall Street Journal, one real estate developer defaulted on $83 million in construction loans. The decline in real estate values in Georgia occurred more than a year before it hit nationally. According to Bloomberg, the holding company’s stock value had declined from $2 at the beginning of the year to 4 cents today.
In an interview published in The Wall Street Journal this week, the FDIC suggested that it would shortly start borrowing money from the Treasury. The money is expected to be paid back after the FDIC sells off the assets it acquires in bank failures. The FDIC says it has gone through about a third of its reserves in the 10 bank failures so far this year. Economists expect as many as 100 to 200 bank failures in the coming year, probably including a few of the largest banks, so the FDIC will need more funds from the Treasury soon.
The timing of this closure, on a holiday weekend, assured that there would be almost no national news coverage. The timing also suggests that the FDIC has many more banks to close in the coming weeks and cannot afford to take a weekend off, even for a national holiday.