WASHINGTON — State regulators shut $209.7 million-asset LibertyPointe Bank of New York, a rare move for a Thursday evening that usually indicates a bank's condition was deteriorating rapidly.
New York Banking Superintendent Richard Neiman cited the bank for "inadequate capital," saying he failed the bank "in order to protect depositors and the public" following the bank's failure to adequately address problems outlined in a July 16 cease and desist order.
LibertyPointe was the 27th failure so far this year, but cost the Deposit Insurance Fund relatively little. The Federal Deposit Insurance Corp. estimated the failure will cost $24.8 million.
The three branches of LibertyPointe will reopen Friday as branches of Valley National Bank of Wayne, N.J., which paid the FDIC a premium of 0.15% to assume all of $209.5 million of deposits. Valley National agreed to purchase essentially all of the failed bank's assets, but entered into a loss sharing agreement with the FDIC on $181.5 million of them.
Failures have become a weekly routine during the financial crisis, but still mostly occur on Fridays after an institution would normally close.
Regulators cited the bank in its July enforcement order for unsafe and unsound banking practices, including operating with inadequate management supervision and oversight by the board and inadequate earnings to fund growth and augment capital.
The order said the bank was also operating with "excessive risk in relation to the kind and quality of assets held by the bank" and cited it for an excessive level of adversely classified and delinquent loans. It also criticized the bank for poor loan policies and procedures, high levels of commercial real estate and inadequate capital and liquidity.