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Posted on Fri, May 14, 2010 : 6:21 p.m.

Bank of Ann Arbor acquires failed bank as FDIC closes New Liberty in Plymouth

By Paula Gardner

Federal regulators closed a failing Plymouth bank on Friday, announcing that the assets of New Liberty Bank would be acquired by the Bank of Ann Arbor.

The acquisition by Bank of Ann Arbor represents the first local takeover of a troubled bank since the banking crisis began in 2008.

New Liberty had $109 million in assets, $102 million of which were deposits, as of this week. The bank operated from a single office on Ann Arbor Road, southwest of Plymouth’s downtown.

The New Liberty office will reopen on Saturday as the sixth full-service retail banking center of the Bank of Ann Arbor and its first outside Washtenaw County.

Regulators say customers’ deposits will continue to be insured, and they should see no change in access to their funds.

"Depositors of New Liberty Bank will automatically become depositors of Bank of Ann Arbor," according to a press release.

The closing - among at least 2 announced today and 70 so far this year - come after New Liberty’s nonperforming loan percentage nearly doubled to 10 percent by the end of 2009.

At issue for the bank, BOAA President Tim Marshall said, appeared to be troubled real estate loans made during 2004-2007.

“It’s very similar to other banks that have gotten into trouble,” Marshall said.

New Liberty had been under a cease and desist order since summer 2009, when the state’s Office of Financial and Insurance Regulation and the Federal Deposit Insurance Corporation charged it with “unsafe or unsound banking practices and violations of law.”

The bank entered into a consent agreement on June 8. Regulators said the bank had been operating with inadequate capital protection, hazardous lending and lax collection practices, and an inadequate funds management policy.

The same order said that New Liberty management’s policies jeopardized the safety of deposits and the board of directors failed to provide adequate supervision.

Information on New Liberty’s web site today did not indicate its president, members of its board of directors or updated financial filings after second quarter 2009.

BOAA officials will be meeting with former New Liberty employees. FDIC records show New LIberty bank employed 16 as of Dec. 31.

“We’ll have an employee staff meeting … and will be meeting with everyone individually,” Marshall said.

Bank of Ann Arbor posted assets of $543 million at year-end 2009, according to the FDIC. It employs 181 at its branches and its headquarters at 125 S. Fifth Ave. in Ann Arbor.

According to the FDIC, "Bank of Ann Arbor did not pay the FDIC a premium for the deposits of New Liberty Bank. In addition to assuming all of the deposits of the failed bank, Bank of Ann Arbor agreed to purchase essentially all of the assets."

There is a loss-share agreement on $95.2 million of the New LIberty assets.

The U.S. had 3 failed banks in 2007, a number that climbed to 25 in 2008 and 140 in 2009 - with up to 200 projected for 2010. So far, the closed banks had combined assets of $609 billion.

Other failed banks so far this year in Michigan include:

• CF Bancorp of Port Huron, which was acquired in April by First Michigan Bank of Troy.

• Lakeside Community Bank in Sterling Heights, which had no bank assume its assets.

Paula Gardner is Business News Director of Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.


Edward R Murrow's Ghost

Sat, May 15, 2010 : 10:40 a.m.

There were 14,000 bank closures between 1920 and the stock market crash. Between the 1929 crash and FDR's taking office, 50% of the nation's banks failed. This slide stopped with the passage of the Glass-Steagall Act and the creation of the FDIC. Congress rescinded the latter in the late 1990s with the predictable resultant financial collapse in 2008. Now spaceman wants to end the latter. Great Depression, here we come. Good Night and Good Luck


Wed, May 9, 2012 : 8:50 p.m.

ever heard of letting the markets work?


Sat, May 15, 2010 : 10:37 a.m.

Gee, SAPCEMAN, why would I want to criminalize "violations of law"? Silly me!


Wed, May 9, 2012 : 8:50 p.m.

you sir are an idiot


Sat, May 15, 2010 : 7:36 a.m.

Bank of Ann Arbor, Ypsilanti, Plymouth... I forgot what separates them from other aspiring financial institutions? Being spread so thin how can they hope to keep in touch with each communities needs and focus as they say they are? Everyone wake up, BoAA is just like every other financial institution except with far fewer services and locations. For over 20 years we've used both little community banks and big box banks and what people don't realize is that the big box banks have more resources and same focus. They too hire the local employees, regional/community directors, pay local taxes, support community efforts and attend to small business. They also have thousands of locations, unmatched online/mobile banking services, progressive technology and convenient extended hours. Even now Chase is installing automated deposit machines which will scan each check and immediately make the funds available into your account up to 9PM! Look for that feature at BoAA.. never. Every small bank with "community focus" will only actually stay small until they can grow or be bought out. Every banks mission is to grow by acquiring more deposits/assets and BoAA's actions prove this theory.


Sat, May 15, 2010 : 7:27 a.m.

Clownfish wants to criminalize stupidity and bad judgement. OK, I'm going to get started on my list of people who need to arrested! Here is another idea - let's get rid of, or at least minimize, the "full faith and credit" of the US Government on bank deposits. Then people will carefully consider where they put their money. Well managed and safe banks will prosper and poor ones will close. The (false) sense of security that comes from deposit insurance has been feeding bad banking practices for years. Kudos to Bank of Ann Arbor who has shown you can be good to both your owners and your customers.


Sat, May 15, 2010 : 7:11 a.m.

unsafe or unsound banking practices and violations of law. Will anybody be charged and spend some time in jail? It is time for more than wrist slapping for the people that brought economic calamity onto the rest of us, be it the loan officers, higher ups at the bank AND/Or the borrowers that knew they had no chance of paying back loans.