Tenth bank failure this year

In keeping with the trend of shutting down banks late on Friday afternoon, the tenth shutdown of the year occurred on Friday. Integrity Bank of Alpharetta was closed by the Georgia Department of Banking and Finance. Why Fridays? It gives officials a couple of days to assess things and prepare for dealing with consumers.

$974 million in deposits at Integrity will be taken over by Regions Bank of Birmingham. The FDIC is reporting that it will end up paying out an estimated $250 million to $350 million for insured deposits.

Why another bank failure? It's said that this one can be blamed on the real estate market. Integrity specialized in real estate lending and grew quickly, but as soon as the real estate market got sketchy the problems started. Late last year there was a management shakeup and the bank was delisted from the Nasdaq market early in 2008.

More banks are expected to fail this year as the real estate market struggles to recover. Many banks built their businesses in large part based on real estate lending, and until the market for real estate and mortgages stabilizes, some banks will be at risk.

Consumers must protect their deposits by educating themselves on the rules for FDIC insurance. The general rule is that an individual is covered for up to $100,000 in all accounts at a bank. But there are certain situations in which more coverage is extended.

Carefully learn the rules and split your money between banks to protect yourself. It's wise to have money at more than one bank, not only because of the insurance issue, but because you may be unable to access your cash for a while in the case of a bank failure. Using more than one bank will hopefully mean that you've got access to at least some of your money during a crisis at a particular bank.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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