US subprime crisis claims another victim

Washington: Regulators closed on Friday Ameribank Inc., which became the 12th bank failure this year as the struggling economy and falling home prices take their toll on financial institutions.

The Federal Deposit Insurance Corp said the Northfork, West Virginia-based bank had $115 million in assets and $102 million in deposits as of June 30. The failure is expected to cost the US bank deposit insurance fund about $42 million.

Pioneer Community Bank Inc in Iaeger, West Virginia, and The Citizens Savings Bank in Martins Ferry, Ohio, entered into agreements to assume all the deposits and certain assets of Ameribank, which was closed by the Office of Thrift Supervision.

The OTS said Ameribank suffered from excessive growth in construction rehabilitation loans, which provided financing to fix distressed properties, mainly in low- to moderate-income housing markets. Customers can access their money over the weekend by cheque, teller machine or debit card, the FDIC said.

The biggest bank failure by far this year was IndyMac, seized on July 11 with $32 billion in assets and $19 billion in deposits as of March. It was the third-largest insured bank insolvency in US history.

With more bank failures expected, investors are worried about the problems with the financial markets which recently have experienced government rescues.