Another Georgia bank failure: Montgomery Bank & Trust, Ailey

From the FDIC:

Montgomery Bank & Trust, Ailey, Georgia, was closed today by the Georgia Department of Banking and Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Ameris Bank, Moultrie, Georgia, to assume all of the deposits of Montgomery Bank & Trust.

The two branches of Montgomery Bank & Trust will reopen on Monday as branches of Ameris Bank. Depositors of Montgomery Bank & Trust will automatically become depositors of Ameris Bank. [. . .]

As of March 31, 2012, Montgomery Bank & Trust had approximately $173.6 million in total assets and $164.4 million in total deposits. In addition to assuming all of the deposits of the failed bank, Ameris Bank agreed to purchase approximately $12.4 million in assets, comprised mainly of cash and cash equivalents. The FDIC will retain the remaining assets for later disposition. [. . .]

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $75.2 million. Compared to other alternatives, Ameris Bank’s acquisition was the least costly resolution for the FDIC’s DIF. Montgomery Bank & Trust is the 32nd FDIC-insured institution to fail in the nation this year, and the sixth in Georgia. The last FDIC-insured institution closed in the state was Security Exchange Bank, Marietta, on June 15, 2012.

A few quick points:

  • Ameris Bank has now acquired at least 9 failed banks since fall 2009 (8 in Georgia, 1 in Florida).
  • The pace of failures has fallen dramatically in 2012 compared to 2011 — twice as many banks in the country had failed by this point in 2011.
  • Georgia’s political leadership has not taken any substantive steps to determine whether state policies contributed to our leading the nation in bank failures.
  • After subtracting this failure, there are 68 Georgia banks on the unofficial problem bank list published by Calculated Risk and maintained by Suferdude808 using FDIC public actions.
UPDATE: Some folks might have seen this closure coming. From the AJC a couple days ago:

The Securities and Exchange Commission said Monday it has received a federal court order to freeze the assets of Aubrey Lee Price, and several associated businesses.

In a 22-page letter to investors, Price allegedly admitted he made false statements to conceal losses of $20 million to $23 million.

Regulators said Price told clients he was investing their money in traditional stocks, but he also put money into “illiquid” bets including South American real estate and shares of Montgomery Bank & Trust.

Tens of millions of dollars were placed into an account at Goldman Sachs, which suffered heavy losses, the SEC complaint said.

William P. Hicks, associate director of the SEC in Atlanta, said Price “made woeful financial transactions” that he hid from his investors.

“Now both the money and Price are missing,” Hicks said.



  1. xdog says:

    Thanks for the story, especially this quote: “Georgia’s political leadership has not taken any substantive steps to determine whether state policies contributed to our leading the nation in bank failures.” I think it’s past time officials investigated whether the state was perhaps too quick to charter banks over the past decade.

    • Calypso says:

      And I’m sure everything is just peachy keen with Jack Murphy chairing the Banking and Financial Institutions Committee.

      What the hell is going on when senate leadership leaves doofuses like ‘Murph The Surf’ and Don ‘Waffle-man’ Balfour in such important committee chairs? Better yet, why the hell are they still in the senate? Bastards.

      • saltycracker says:

        Personal guarantees by politicians to ignore and VIP loan programs to influential politicians (AJC article 7/6)… us a warm and fuzzy feeling…

      • saltycracker says:

        So calypso help me here on the state senate –
        Do we vote for Rogers who thinks murph should stay as chair and votes our way if he can do things his way or Beach who believes tsplost is for the greater good and public schools don’t need competition ?

        • Calypso says:

          The Chip is not my district, but Fat Boy Balfour is. I would go against the conventional wisdom in these situations and vote for the devil I DON’T know, rather than the one I DO know. What the hell, how much worse could it really be?

          Vote for the challengers if you’re on the fence.

          • saltycracker says:

            Think I’ll opt for the side of the fence with the least tolls/penalties on me, not to just hope the grass is greener.

            P.s drove to Florida today – guess where the gas is cheaper ?
            Hint – not in the low gas tax state….

  2. saltycracker says:

    The local rotten culture is reflective of the national and worldwide culture. The same bunch that ran the too big to fail banks and the political oversight into crisis are the same ones running the show today.

    A bigger scandal in LIBOR is now brewing:
    NEW YORK (CNNMoney) — The Libor interest-rate-fixing scandal has already cost Barclays more than $450 million. For the British banking giant and others, however, that could be just the beginning.

    Two dozen lawsuits have been filed against banks involved in setting Libor by plaintiffs who claim they lost money as a result of the rate’s manipulation. And that’s just in the United States — given Libor’s global reach, investors around the world may have cases.

  3. James says:

    If you guys really want to get upset, start reading about how the FDIC loss-share agreements work. There’s a reason why “community lenders” like Ameris are buying up the assets of failed banks — because they get paid very well to do so.

    • Michael K. says:

      Not sure what you mean by that James. The alternative to the FDIC finding a buyer for the failed institution is that it is closed down and checks are sent out to the insured depositors. The community loses the services of a bank in their area, and the FDIC takes ALL the loans. The Loss Share programs minimize the losses that the FDIC would sustain if they had to hold all the loans, and “shares” the risk with the acquiring institution. The community has the benefit of maintaining their banking services with little interruption.

      With every bank failure the FDIC by regulation has to assess the failure costs and use the least cost resolution. The costs associated with this failure are $75.2 million. Remember also that the FDIC is funded through assessments on banks, and is NOT funded by taxpayer money.

    • James says:

      Matt, I’m the attorney for the developer. I represent a lot of developers these days, and I’ve had to become familiar with the operation of these loss share agreements as a result.

      • saltycracker says:

        Developers didn’t exactly come to the party with clean hands either as they leveraged up to advantage the oversupply of money and cozied up with local zoning folks to pass on a heavy percentage of the resulting public infrastructure costs to the taxpayers.

  4. saltycracker says:

    It would appear the community banks continue in the perfect storm with the too big to fails squeezing them via earnings from exotic leveraged financial products, small businesses finding alternative financing as they abate taxes with weak balance sheets and the costs of heavy oversight.

    Suggested consideration has been to seperate the investment and lending banks with FDIC for the latter only along with reducing taxation to a flat rate of around 10%.

  5. Harry says:

    From “Auraria: The Story of a Georgia Gold Mining Town”, by E. Merton Coulter:
    Early in 1834 Thomas C. Bowen, a native Irishman, was intrusted by the Aurarian agent of the Darien Bank, with 14,950 pennyweights of gold to be taken to Savannah. This amount of gold outweighed Bowen’s sense of honesty; instead of taking it to Savannah, he disappeared with it. A letter from him, postmarked in Charleston, explained that “he could not withstand the temptation, that pursuit would be useless, and that his creditors might make the best of the goods he had left behind.”

Comments are closed.