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.

Effect on Depositors

None of Ameribank's depositors will lose money as a result of the closing, even if they had balances exceeding FDIC insurance limits.

All five of Ameribank's West Virginia branches have been acquired by Pioneer Community Bank of Iaeger, W.Va. All three of the failed institution's branches in Ohio were bought by Citizens Savings Bank of Martins Ferry, Ohio (held by United Bancorp ( UBCP)). These purchases included all uninsured balances.

The FDIC said the sale of all deposits to the two banks was the least costly option in Ameribank's closing, since "expected losses to uninsured depositors were fully covered by the premium paid for the bank's franchises." The cost of the closing to the FDIC's Deposit Insurance Fund was estimated to be $42 million.

Receivership, Uninsured Deposits

Out of the 12 bank and thrift closings during 2008, six failed institutions had all of their deposits, including those with balances exceeding FDIC limits, acquired by other institutions. FDIC spokesman David Barr pointed out that, typically, only about 25% of bank failures end up with uninsured deposits taking no losses.

For the other six banks and thrifts that failed this year, including larger institutions like IndyMac Bank, FSB and ANB Financial, depositors with uninsured balances became creditors to the FDIC receiverships for the uninsured amounts.

IndyMac received an advance dividend of 50 cents for each dollar of uninsured depositors when the FDIC took over the institution in July. At that time, IndyMac's uninsured deposits were estimated to be about $1 billion.

In the case of ANB Financial, uninsured depositors received no advance dividends.

Bank, Thrift Ratings

TheStreet.com Ratings provides objective, conservative financial strength ratings for all U.S. banks and thrifts. While you might feel safe if all of your deposits are under FDIC insurance limits, it is still a good idea to check out your institution's rating, and ask some questions if the rating is below a C- (Fair Financial Strength).

It is also important to consider that you or someone you know may be affiliated with a business or municipal depositor (such as a school district) that keeps large uninsured balances in a local institution.

Financial Strength Raitngs on each of the nation's 8,600 banks and savings and loans are available at no charge on the Banks & Thrifts Screener. In addition, the Financial Strength Ratings for 4,000 life, health, annuity and property/casualty insurers are available on the Insurers & HMOs Screener.

Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.

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