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

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.