Dedicated to Deposits: Deals, Data, and Discussion

Integrity Bank Fails, Regions Bank Acquires Deposits

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Integrity Bank of Alpharetta, Georgia was closed today by Georgia regulators and the FDIC was named receiver. Here's the FDIC's press release link, and here's a summary of the closure:
  • Closed Bank: Integrity Bank
  • Location: Alpharetta, Georgia
  • Size: 5 branches, $1.1 billion assets, $974 million deposits
  • Possible Uninsured Deposits: ALL deposits transfered to new bank
  • Acquiring Bank: Regions Bank, Birmingham, Alabama
  • Cost to Deposit Insurance Fund: $250 million to $350 million (estimated)
  • 2008 closures: 10th bank to be closed this year
  • Financial Ratings: 0 stars at BauerFinancial, 1 star at Bankrate.com

No depositors will be losing any money. According to the press release:
All depositors of Integrity Bank, including those with deposits in excess of the FDIC's insurance limits, will automatically become depositors of Regions Bank for the full amount of their deposits, and they will continue to have uninterrupted access to their deposits.

That's good news for any depositors who may have been over the FDIC limits, but you have to wonder if this is more costly for the FDIC. Coincidentally, one of the other failed banks this year in which the FDIC covered all unisured deposits had a similar name, First Integrity (see post). However, bank customers should not consider this to be typical. The FDIC didn't seem to cover any of the uninsured deposits after a Kansas bank failed last week. For IndyMac's failure, the FDIC immmediately paid out only 50% of uninsured deposits.

Good News for Integrity CD Customers

According to this FDIC FAQ, "Regions Bank will honor all current non-brokered CDs to maturity." In addition, you still have the option to make a penalty-free withdrawal. From this FAQ, "You may withdraw funds from any transferred account without an early withdrawal penalty until you enter into a new deposit agreement with the Regions Bank." So depositors get the best of both worlds.

I have posted on many CD deals from Integrity Bank over the last couple of years. Their most recent deal was a 4.50% 6-month CD and a 5% 30-month CD. They also had been offering a 5% reward checking account. In my last Integrity post, I referenced a newspaper article describing the problems of this bank. They had hired a new CEO last year who had been a former bank regulator turned fix-it guy for banks. I guess this was too much for him to fix.

Here's the FDIC list of all the recent bank failures. For more info on FDIC coverage, please refer to my Facts about FDIC and NCUA post. For issues on FDIC and NCUA coverage above $100K, please refer to this recent post.

Thanks to the readers who notified me of this news.

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Comments
7 comments.
Comment #1 by Anonymous posted on
Anonymous
I see a pattern here:

Nextbank, followed by Netbank of Alpharetta GA.
First Integrity, followed by Integrity of Alpharetta GA.

Does Alpharetta have any other banks with shortened versions of the names of failed banks?

1
Comment #2 by Banking Guy (anonymous) posted on
Banking Guy
I had forgotten about NetBank also being from Alpharetta. It's a small city to have two failed banks.

1
Comment #3 by Anonymous posted on
Anonymous
Alpha Bank & Trust is also in Alpharetta, GA.

I have a CD with this bank that matures mid September. I actually have really liked dealing with this bank ... their Texas ratio is quite high (but nowhere near as bad as Integrity Bank).

It's only been around for maybe a couple of years. Bauer Financial has no rating, just calls it a startup. Bankrate gives it it's lowest rating, 1 star.

Alpha Bank & Trust is currently offering 4.5% APY for 9 months.
Since there are better deals out there from larger banks, I will probably not renew.

1
Comment #4 by Anonymous posted on
Anonymous
Perhaps Alpharetta is too small to have two banks?

1
Comment #5 by Michael (anonymous) posted on
Michael
You know, with everything going on concerning bank failures, I feel better knowing there is this great Bank Deals blog to keep me better informed.

Plus, with his wealth of information, I might be able to make more money on my money.

Thank you, Banking Guy!

You are appreciated.

1
Comment #6 by Laszlo (anonymous) posted on
Laszlo
I notice that a lot of banks offering high rates on CDs are the ones doing poorly financially and at risk of failing. It's tempting me to buy some long-term CDs from a struggling bank and betting that the bank will fail before the CD matures. Thus, I would be able to enjoy the higher returns without being locked in for the full term.

1
Comment #7 by Bozo (anonymous) posted on
Bozo
Re: Alpha Bank & Trust

I had to laugh a little. When Alpha Bank & Trust was offering some unseemly high rates months ago, I called the toll-free number, and, surprise, got a person on the phone right away. Without being too flip, she sounded a bit flummoxed.

I then decided to keep my money a tad closer to home.

Bozo

1