Dedicated to Deposits: Deals, Data, and Discussion

Bank Closure: Ameribank of West Virginia

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Ameribank, a small bank in West Virginia, was closed today by the Office of Thrift Supervision, and the FDIC was named receiver. Here's the FDIC's press release link, and here's a summary of the closure:
  • Closed Bank: Ameribank, Inc.
  • Location: Northfork, WV
  • Size: 8 branches (5 in WV & 3 in OH), $115 million assets, $102 million deposits
  • Possible Uninsured Deposits: ALL deposits transfered to acquiring banks
  • Acquiring Banks: Pioneer Community Bank & The Citizens Savings Bank
  • Cost to Deposit Insurance Fund: $42 million (estimated)
  • 2008 closures: 12th bank to be closed this year
  • Financial Ratings: 0 stars at BauerFinancial, 1 star at Bankrate.com
This is another closure in which those with uninsured deposits were lucky. From the press release:
All depositors, including those with deposits in excess of the FDIC's insurance limits, will automatically become depositors of the assuming institution where the customer opened the account for the full amount of their deposits. All deposits will continue to be insured with the new institutions. Therefore, there is no need for customers to change their banking relationship to retain deposit insurance. Brokered deposits are included in this transaction.

Some may wonder why the uninsured deposits would be covered. As I described in this post, it's likely due to the acquiring banks agreeing to assume these deposits.

The Office of Thrift Supervision has its own press release and describes why it closed the bank:
Ameribank's troubles stemmed from excessive growth in construction rehabilitation loans, which provided financing for the rehabilitation of distressed properties, predominantly in low- to moderate-income housing markets.

The quarter ending June 30, 2008, marked the fourth consecutive quarter of net losses and capital erosion for Ameribank. The OTS determined that Ameribank was "Critically Undercapitalized" and the institution was unable to develop a viable plan to restore capital to adequate levels.

I searched my archives, and I can't find any posts that I've written on this bank.

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 and my recent post on FDIC News, Resources and History.

Thanks to the readers who sent me news of this closure.
  Tags: West Virginia

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Comments
Comment #1 by Anonymous posted on
Anonymous
I still don't understand, if it's costing the FDIC $42M, why the FDIC doesn't use the uninsured deposits to lower its own loss, regardless of whether the other bank is willing to assume the deposits.

1