Ameribank, Incorporated ,Pioneer Community Bank of Iaeger and The Citizens Savings Bank of Martins Ferry, Ohio have purchased Ameribank’s assets
Federal regulators took over Ameribank, Incorporated Friday because of a series of bad debts tied to the foreclosure crisis.Ameribank is based in one of the poorest places in America – McDowell County, West Virginia -- and residents there have now witnessed the failure of not one, but two banks in the last ten years.
In 1999, First National Bank of Keystone collapsed after federal investigators discovered massive embezzlement and risky investments.Then, Ameribank took over Keystone Bank’s assets – but it appears that shaky loans are again to blame for its failure – especially loans to developers who were flipping properties in Florida.
Ameribank has five branches in McDowell County and three branches in eastern Ohio, and more than 60 employees.Two local banks, Pioneer Community Bank of Iaeger and The Citizens Savings Bank of Martins Ferry, Ohio have purchased Ameribank’s assets, and local depositors are being told they will receive the full amount of their deposits – even deposits over the $100,000 FDIC insured limit.The takeover is expected to cost the FDIC $42 million. It is the 12th bank failure in the U.S. so far this year.
In a July interview with West Virginia Public Broadcasting, David Hartman, Chairman and President of Ameribank, blamed the bank’s troubles on previous bank officials who lent money to developers who were buying houses, fixing them up and selling them to low-income families – a practice commonly known as flipping a property.
"My bank, the people who were here before me, bought these loans as part of an expansion plan to generate income for the bank,” Hartman said. “And for three or four years, it all worked fine. But with the sub-prime market starting to dry up, the end buyers of these homes went away."In July, Vondelere Scott of Keystone worried that the bank’s failure would be another blow to her hard-hit community.
Scott kept her money with Ameribank and works as treasurer, recorder, clerk and traffic judge for the tiny town of Keystone.Scott remembers the days before the collapse of First National Bank of Keystone. "The bank was here, we had a $525,000 budget. Now, our budget is less than $125,000 a year," she said.The town’s population has declined by half since the bank failure – some because of the bank, but mostly because of a series of devastating floods.Scott said she’s a survivor. "The flood didn’t run me out and the bank didn’t run me out. So I’m in good shape," she said.In the early 90s, the Bank of Keystone was struggling to survive amid played-out coal mines and a declining population in West Virginia’s poorest county.Outsiders from Pennsylvania took over leadership, and began buying, packaging, and selling subprime loans throughout the nation. The bank grew from about $100 million in assets to more than $1 billion.But its success was built largely on fraud. In 1999, the bank collapsed as federal officials discovered massive embezzlement by top bank officials, risky investments and shoddy record-keeping.Local residents lost tens of millions because they put more than the federal-insured $100,000 limit in the bank. Taxpayers spent $557 million bailing out the bank, according to the FDIC.
In 1999, First National Bank of Keystone collapsed after federal investigators discovered massive embezzlement and risky investments.Then, Ameribank took over Keystone Bank’s assets – but it appears that shaky loans are again to blame for its failure – especially loans to developers who were flipping properties in Florida.
Ameribank has five branches in McDowell County and three branches in eastern Ohio, and more than 60 employees.Two local banks, Pioneer Community Bank of Iaeger and The Citizens Savings Bank of Martins Ferry, Ohio have purchased Ameribank’s assets, and local depositors are being told they will receive the full amount of their deposits – even deposits over the $100,000 FDIC insured limit.The takeover is expected to cost the FDIC $42 million. It is the 12th bank failure in the U.S. so far this year.
In a July interview with West Virginia Public Broadcasting, David Hartman, Chairman and President of Ameribank, blamed the bank’s troubles on previous bank officials who lent money to developers who were buying houses, fixing them up and selling them to low-income families – a practice commonly known as flipping a property.
"My bank, the people who were here before me, bought these loans as part of an expansion plan to generate income for the bank,” Hartman said. “And for three or four years, it all worked fine. But with the sub-prime market starting to dry up, the end buyers of these homes went away."In July, Vondelere Scott of Keystone worried that the bank’s failure would be another blow to her hard-hit community.
Scott kept her money with Ameribank and works as treasurer, recorder, clerk and traffic judge for the tiny town of Keystone.Scott remembers the days before the collapse of First National Bank of Keystone. "The bank was here, we had a $525,000 budget. Now, our budget is less than $125,000 a year," she said.The town’s population has declined by half since the bank failure – some because of the bank, but mostly because of a series of devastating floods.Scott said she’s a survivor. "The flood didn’t run me out and the bank didn’t run me out. So I’m in good shape," she said.In the early 90s, the Bank of Keystone was struggling to survive amid played-out coal mines and a declining population in West Virginia’s poorest county.Outsiders from Pennsylvania took over leadership, and began buying, packaging, and selling subprime loans throughout the nation. The bank grew from about $100 million in assets to more than $1 billion.But its success was built largely on fraud. In 1999, the bank collapsed as federal officials discovered massive embezzlement by top bank officials, risky investments and shoddy record-keeping.Local residents lost tens of millions because they put more than the federal-insured $100,000 limit in the bank. Taxpayers spent $557 million bailing out the bank, according to the FDIC.
Comments