Suit targets Alpha bank directors

By Paul Donsky

The Atlanta Journal-Constitution

A group of shareholders who invested in failed Alpha Bank of Alpharetta has filed a lawsuit against the bank’s former board of directors, claiming it failed to disclose important information about the bank’s financial condition as it hurtled toward closure in late 2008.

It’s one of the first director lawsuits to be filed in what experts predict will be a wave of similar legal actions as investors seek to recoup losses suffered during the state’s banking meltdown. Most bank board members carry liability insurance, but policies have a deductible and total coverage at many small banks is often not that high.

Alpha was the second Georgia bank to fail during the current cycle, shut down by regulators in October 2008 after less than three years in business. At the time, more than a quarter of the bank’s loans were considered troubled, mostly tied to real estate deals gone bad.

The banks problems came on quickly. In December 2007, the bank reported $5 million in troubled, or nonperforming, loans. By the end of the third quarter of 2008, the figure stood at $130 million.

Alpha opened after raising $34.2 million in startup capital, the third-highest amount among the 99 banks that opened between 2000 and 2009, according to state Department of Banking and Finance records.

The lawsuit, filed in Cobb County Superior Court on Wednesday, names three directors as defendants: James A. Blackwell, Joseph A. Briner and William J. Lohmeyer. Briner was also CEO at Alpha until February 2008, when he was replaced by Lohmeyer, who served as interim CEO, according to the lawsuit.

The lawsuit says the defendants failed to timely tell shareholders that the bank had deviated from its original business plan and had suffered a stinging review by regulators in April 2008.