Ameribank 12th Bank Failure in 2008

The Office of Thrift Supervision announced late Friday the closing of Ameribank Inc. of Northfork, W. Va., the 12th bank or thrift closing this year.

Ameribank had been assigned an E- (Very Weak) financial strength rating by TheStreet.com Ratings in June after a downgrade to E from D+ (Weak) in December 2007.

The thrift was considered significantly undercapitalized as of June 30, 2008, with a leverage ratio of 2.14% and a risk-based capital ratio of just 4.19%. These ratios need to be at least 5% and 10% for a bank or thrift to be considered well-capitalized under regulatory guidelines.

In its announcement of Ameribank's closing, the OTS cited the $115 million institution's heavy concentration in nonperforming residential rehabilitation loans and said the thrift's capital situation had continued to deteriorate during the third quarter. The OTS went on to say that it had established a "continuous on-site presence" at the institution in May 2007.

After determining that the institution was critically undercapitalized and had no viable plan to raise capital, the OTS closed Ameribank and appointed the FDIC receiver.

Since the institution reported nonperforming assets comprising 33.7% as of June 30, along with its already low level of capital, it is surprising the OTS waited this long to close Ameribank.

The agency told TheStreet.com that it determined Ameribank was critically undercapitalized in July, and that this was a normal timeframe for the closing of an institution. The OTS also stated that while the failed thrift was continuously monitored over the past year, it did not actually have an examiner on-site at all times.

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