Integrity Bank of Alpharetta, Georgia, just north of Atlanta, is the 10th bank to fail in the country this year. While relatively small and new, the bank had grown quickly in the developing North Atlanta region as it provided financing for construction loans as Atlanta added 1 million residents over the past decade.

Integrity’s assets are being taken over by the FDIC and Regions Bank out of Birmingham, Alabama. What makes me laugh is that the Region’s had been buying up small banks all over Georgia a couple of years ago. With a little foresight they could have sold for a big profit to the Regions folks instead of being absorbed as they are now.

A huge reliance on construction loans is now the indicator of a bank that is in a weak position to me. Watching the banks that have gone under the past few weeks seems to amplify that trend.

Integrity Bank, which opened for business in November 2000, specialized in real estate lending in the Atlanta area with a self-described “faith-based culture.” Throughout the early part of the decade when the housing market was booming, Integrity Bank grew into a billion-dollar publicly traded company — but when the real estate market started faltering, the bank struggled.

A F.D.I.C. spokesman, Rickey McCullough, said late Friday that the bank had failed because of its aggressive pursuit of construction loans, coupled with falling real estate values and “inadequate risk management.”

Construction loans were 76 percent of the bank’s total loan portfolio. During the quarter ended June 30, the bank posted a net loss of $33.6 million. via  NYTimes.com

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