Alabama Trust Bank, National Association, Sylacauga, Alabama, was closed today by the Office of the Comptroller of the Currency. The FDIC, appointed as receiver, sold the failed bank to Southern States Bank, Anniston, Alabama, which assumed all deposits of Alabama Trust Bank.
Alabama Trust Bank, established in April 2000, was a small one branch bank with only $51.6 million in assets and less than 30 employees. The bank grew rapidly during the lending boom years of the 2000’s growing from only $10 million in assets in 2000 to over $110 million by early 2008.
Alabama Trust ran into trouble with an accelerating amount of loan defaults and by the of 2011, the Bank had a troubled asset ratio of almost 200%. Once the level of troubled loans exceeds 100%, bank failure is almost inevitable.
In December 2010, Alabama Trust Bank signed a Consent Order with the Comptroller of the Currency agreeing to institute measures to cure operating and financial deficiencies cited in the Consent Order. The Bank was unable to recover financially and the amount of loan defaults increased rapidly during 2011 which ultimately lead to the Bank’s failure.
Alabama Trust will reopen on Saturday as a branch of Southern States Bank and all depositors of Alabama Trust will automatically become depositors of Southern States Bank. Over the weekend, depositors of Alabama Trust will have access to their money through the use of debit cards, checks and ATMs.
Southern States Bank agreed to purchase all of the assets of Alabama Trust. As of March 31, 2012, Alabama Trust had total deposits of $45.1 million and total assets of $51.6 million. Southern States Bank, established in August 2007, is profitable and has over $200 million in total assets. Today’s acquisition of Alabama Trust was the first purchase of a failed bank by Southern States.
The cost to the FDIC Deposit Insurance Fund for the failure of Alabama Trust is $8.9 million. Alabama Trust becomes the 24th banking failure of 2012 and the first in Alabama.