Regulators Shut Down Ameribank In W.Va.
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Saturday, September 20, 2008
Federal regulators have shut down Ameribank, a small bank in West Virginia, saying it overextended loans for the rehabilitation of distressed properties. It was the 12th failure this year of a federally insured bank.
The Federal Deposit Insurance Corp. has been appointed receiver of the bank, based in Northfork, W.Va. It had $115 million in assets and $102 million in deposits as of June 30.
The FDIC said yesterday that the bank's insured deposits will be assumed by Pioneer Community Bank of Iaeger, W.Va., and Citizens Savings Bank in Martins Ferry, Ohio.
Its five branches in West Virginia will reopen Monday as offices of Pioneer Community Bank and its three Ohio branches will reopen Sunday as offices of Citizens Savings.
Ameribank ran into trouble because of "excessive growth" in the construction loans for property rehabilitation, mainly in low- and moderate-income housing markets, according to the federal Office of Thrift Supervision, the bank's primary regulator.
The regulators tagged Ameribank as a troubled institution in May 2007 and issued a formal enforcement order to the bank in October, saying it had failed to comply with their earlier directives.
Construction and development loans have been the fastest-growing category of troubled loans for U.S. banks, and many banks have heavy concentrations of them in their portfolios, according to the FDIC. Some small banks are considered especially vulnerable.
The FDIC estimated that its resolution will cost the federal deposit insurance fund $42 million. Regular deposit accounts are insured up to $100,000; individual retirement accounts held in banks are insured up to $250,000.
