Georgia’s Alpha Bank & Trust Fails

(Update 1: added FDIC call report data) Alpharetta, Georgia-based Alpha Bank and Trust became the latest Friday-afternoon casualty in a growing line of failed banks, with the Federal Deposit Insurance Corp. saying that the Georgia Department of Banking and Finance had closed the bank and named the FDIC receiver. St. Cloud, Minn.-based Stearns Bank will assume all insured deposits at the bank under a purchase and assumption agreement, the FDIC said in a press statement. Alpha Bank is the nation’s 16th bank failure this year, and like many of the others before it, is a small community banking outfit. As of Sept. 30, 2008, the bank had total assets of $354.1 million and total deposits of $346.2 million. Stearns Bank did not pay the FDIC a premium for the right to assume the failed bank’s insured deposits. The FDIC said that approximately $3.1 million in uninsured deposits held in approximately 59 accounts exceeded the newly-instituted deposit insurance limit of $250,000; no information on how much would have been uninsured sans recent Congressional action to boost the insurance limit was provided by the FDIC. Stearns bank did not acquire uninsured deposits, nor $16.8 million in brokered deposits. The FDIC estimated that the cost to the deposit insurance fund will be $158.1 million — a number that should bring about a double take from any investor. Alpha only had $354.1 million in total deposits; even if brokered deposits end up wholly uninsured, which seems unlikely, and all uninsured deposits are a direct hit to the DIF, that leaves $138.2 million in assets in play relative to the expected loss. And that’s even with Stearns agreeing to acquire $38.9 million of Alpha’s assets, as well. A review of the bank’s most recent call report with the FDIC shows that of the bank’s $383.2 million in assets at the end of June, $166.6 million were construction and land development loans, and another $67.1 million were single-family residential mortgages. Such heavy C&D exposure is proving to be a common theme among failed community banks thus far. For more information, visit http://www.fdic.gov.