August 29, 2008 / 10:24 PM / 11 years ago

UPDATE 1-Georgia bank becomes 10th U.S. failed bank--FDIC

(Adds details, background)

WASHINGTON, Aug 29 (Reuters) - U.S. regulators on Friday took over Integrity Bank, which became the 10th bank to fail this year as the economy struggles under the weight of falling home prices and the credit crisis.

The Federal Deposit Insurance Corp said Georgia regulators closed the Alpharetta-based bank, which had $1.1 billion in total assets and $974 million in total deposits as of June 30.

The FDIC, which was named receiver, said Regions Bank of Birmingham, Alabama, agreed to pay a 1 percent premium to acquire all of the deposits and buy about $34.4 million of Integrity’s assets.

Regions Bank is owned by Regions Financial Corp (RF.N).

The FDIC estimated the impact of Integrity on the $45.2 billion insurance fund to be between $250 million and $350 million.

FDIC spokesman Andrew Gray said Integrity Bank pursued aggressive loan growth in the metropolitan Atlanta real estate market, especially in the construction loan area.

Falling real estate prices combined with inadequate risk management and poor lending practices led to significant loan losses and erosion of the bank’s capital, Gray said.

The failed bank’s five offices will reopen on Tuesday as branches of Regions Bank and customers will have access to their deposits over the weekend, said the FDIC which insures up to $100,000 per account and $250,000 per individual retirement account at insured banks.

The FDIC also maintains a running tally of problem banks examiners closely monitor. At the end of second quarter, 117 institutions were on that list.

U.S. banking regulators have warned of additional insolvencies this year and next, but not involving the size of IndyMac, which became the third largest failure in U.S. banking history.

IndyMac drained about $8.9 billion from the deposit insurance fund, regulators said. (Reporting by John Poirier; Editing by Andre Grenon)

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