Integrity Bank Fails
August 30th 2008 00:42
Integrity Bank of Alpharetta Georgia, operated five branches, was the tenth bank to fail this year. The bank will be absorbed by Regions Bank of Birmingham, Ala. The FDIC estimates that it will cost the fund between $250 million to $350 million.
Integrity Bank, which opened for business in November of 2000, specialized in real-estate lending in the Atlanta area with a self-described "faith-based culture." Throughout the early part of the decade when the housing market was booming, Integrity Bank grew into a billion-dollar, publicly-traded company _ but when the real estate market started faltering, the bank found itself in trouble.
According to the Wall Street Journal,
Integrity has acknowledged that it made 14 loans for a total of $83 million to entities owned by the same guarantor; that amount represented almost all of the bank's available capital early last year. While Integrity didn't disclose the identity of this borrower, people familiar with the matter say it was Guy Mitchell, a Coral Gables, Fla.-based property investor. The money went to five shopping centers, a primary residence for Mr. Mitchell, and a condominium-conversion project.
Georgia law limits to 25% of available capital the amount of credit secured by real estate that a bank can lend to one borrower.
All of the bank's loans to Mitchell are in default!
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