EVANSVILLE —Shortly before 6 p.m. Friday, a dozen or so Evansville Police Department squad cars simultaneously pulled up to Integra Bank’s Downtown Headquarters on Third Street.
A few minutes after that, squads of Federal Deposit Insurance Corp. employees arrived, toting rolling storage bins and suitcases into the building.
It was the end of the line for Integra — the bank had failed, Old National Bank was taking over, and the feds were there to sort everything out.
Inside the failed bank’s headquarters, Old National President and Chief Executive Officer Bob Jones was talking to Integra employees, who Saturday become Old National employees.
In technical terms: The Office of the Comptroller of the Currency, Integra’s banking regulator, closed the bank, and the FDIC had been appointed as receiver. The FDIC entered into a purchase agreement with Old national, which will assume all of Integra’s deposits.
Beginning today, Integra’s 52 branches will reopen as branches of Old National. Integra depositors will automatically become Old National depositors. Those deposits will continue to be insured by the FDIC.
Integra customers were able to access their funds by check, ATM or debit card last night and will continue to be able to do so this weekend. Checks drawn on Integra will continue to be processed, and loan customers should continue to make their payments as usual, the FDIC said.
Starting Monday, those customers can use the former Integra ATMs or any Old National ATM. However, former Integra customers should continue to use former Integra branches until further notice, Jones said.
After meeting with Integra employees Friday Jones came outside to talk with reporters, some of whom had staked out the Downtown building for hours.
"It is bittersweet. They’ve been around 150-plus years, and it’s tough," Jones said of Integra.
Jones said Old National will hold a closed-door meeting with former Integra employees Sunday afternoon so they can ask questions once they’ve had a chance to absorb the news.
"Obviously, those poor folks are shellshocked right now," Jones said of the failed bank’s workers.
For the time being, Jones said, all former Integra employees, from branch workers to top executives, will remain on board as Old National employees.
Old National has not yet determined which or how many former Integra branch offices it will close, Jones said. That decision, he said, should come within the next 30 days. In some cases, Integra and Old National branches are located only blocks from each other.
Jones gave high marks to Integra’s employees, from branch workers up to top executives, for their efforts to keep the struggling bank afloat.
"(Integra Bank Chairman and Chief Executive Officer Mike Alley) did a good job, and I mean that from the bottom of my heart," Jones said.
Alley could not be reached for comment Friday evening.
Gerald Billings, senior ombudsman specialist with the FDIC, said the Integra bank closure was more complicated than many because of the scope of the project.
Integra had 52 branches spanning two time zones and three states. While most of its branches were located within 100 miles of Evansville, the bank also had four Chicago-area branches.
When federal authorities close a bank they enter the bank’s headquarters and branch offices at once, most often at closing time on a Friday, to take inventory and reconcile the failed bank’s books so that the acquiring bank can take over. About 150 FDIC employees were involved in the Integra closure, Billings said.
Integra’s failure came as no surprise to anyone familiar with the company’s recent financial difficulties, which included huge financial losses, troublesome loans and too little capital.
Bank officials had been working to right the ship, selling outlying branches and attempting to raise capital levels. But in the end, the bank’s problems proved insurmountable.
Integra’s last profitable period was the first quarter of 2008, when the bank posted earnings of nearly $5 million (24 cents per share). After that quarter, Integra started to run into financial problems that mounted as the months went on.
In its 2010 annual report, Integra said it had a net loss of $124.2 million 2010, and total losses of $430.1 million over the past three years.
Its stock price had languished, recently trading for only pennies a share.
The FDIC’s Billings said Old National was one of three banks that submitted bids to buy Integra. He said Old National’s bid was accepted because it was considered the best bid for benefit of both the FDIC and Integra’s depositors.
As of March 31, 2011, Integra had approximately $2.2 billion in total assets and $1.9 billion in total deposits, according to the FDIC. Old National will pay the FDIC a 1 percent premium to assume all of Integra’s deposits. Old National also agreed to purchase essentially all of the failed bank’s assets.
In FDIC-assisted takeovers, the FDIC enters into a loss-sharing arrangement to reduce the financial risk to the acquiring bank.
In the case of the Integra failure, Billings said the estimated cost to the FDIC’s Deposit Insurance Fund will be $170.7 million. Regulators prefer to see troubled banks work their way out of difficulties, Billings said, and it closes banks as "absolutely a matter of last resort."