By New York Times
State banking regulators on Thursday evening shut down the troubled LibertyPointe Bank, whose chairman, Shaya Boymelgreen, built more than 2,400 apartments in New York City in the last decade.
The failure was the 27th in the nation this year but the first in the city in more than a decade, regulators said.
LibertyPointe, which had one branch in Manhattan and two in Brooklyn, had been struggling under the weight of bad real estate loans for many months. In mid-July, federal regulators ordered the bank to stop lending to developers and to raise cash.
But time ran out for LibertyPointe on Thursday. State regulators seized the bank and turned it over to the Federal Deposit Insurance Corporation, which struck a deal with Valley National Bank. Valley National will assume LibertyPointe’s deposits, which totaled about $210 million, and about one-tenth of its outstanding loans.
Valley National, which is based in Wayne, N.J., agreed to share losses on the rest of LibertyPointe’s loan portfolio with the F.D.I.C., regulators said. The F.D.I.C. estimated that the rescue would cost its insurance fund $24.8 million.
Gerald H. Lipkin, the chairman and chief executive of Valley National, said in a statement that the three branches would reopen Friday morning as part of Valley National’s 201-branch network.
LibertyPointe’s depositors will be treated as customers of Valley National. “Our primary focus is to assure customers that their deposits are safe and remain readily accessible to them,” Mr. Lipkin said.
The recession has caused a wave of bank failures across the country, but only one bank failed in New York State in the last five years. The State Banking Department closed Waterford Village Bank, based in Williamsville, near Buffalo, in July.
The last failure of a New York City-based bank occurred in December 1999, when regulators closed Golden City Commercial Bank, a small bank that had an office in Flushing, Queens, and one on Lower Broadway in Manhattan.