Two more Georgia bank failures: First Cherokee Bank in Woodstock and Georgia Trust Bank in Buford

There have now been 36 failed banks in the U.S. so far in 2012. Eight have been based in Georgia. Both of today’s failed banks were taken over by Community & Southern Bank in Atlanta.

From the FDIC:

Georgia Trust Bank, Buford, 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 Community & Southern Bank, Atlanta, Georgia, to assume all of the deposits of Georgia Trust Bank. [. . .]

As of March 31, 2012, Georgia Trust Bank had approximately $119.8 million in total assets and $117.4 million in total deposits. Community & Southern Bank will pay the FDIC a premium of 0.50 percent to assume all of the deposits of Georgia Trust Bank. In addition to assuming all of the deposits of the failed bank, Community & Southern Bank agreed to purchase approximately $111.5 million of the failed bank’s assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and Community & Southern Bank entered into a loss-share transaction on $65.9 million of Georgia Trust Bank’s assets. Community & Southern Bank will share in the losses on the asset pools covered under the loss-share agreement. [. . .]

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $20.9 million.

From the FDIC:

First Cherokee State Bank, Woodstock, 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 Community & Southern Bank, Atlanta, Georgia, to assume all of the deposits of First Cherokee State Bank. [. . .]

As of March 31, 2012, First Cherokee State Bank had approximately $222.7 million in total assets and $193.3 million in total deposits. Community & Southern Bank will pay the FDIC a premium of 0.50 percent to assume all of the deposits of First Cherokee State Bank. In addition to assuming all of the deposits of the failed bank, Community & Southern Bank agreed to purchase essentially all of the failed bank’s assets.

The FDIC and Community & Southern Bank entered into a loss-share transaction on $141.8 million of First Cherokee State Bank’s assets. Community & Southern Bank will share in the losses on the asset pools covered under the loss-share agreement. [. . .]

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $36.9 million. Compared to other alternatives, Community & Southern Bank’s acquisition was the least costly resolution for the FDIC’s DIF. First Cherokee State Bank is the 36th FDIC-insured institution to fail in the nation this year, and the eighth in Georgia. The last FDIC-insured institution closed in the state was Georgia Trust Bank, Buford, earlier today.

25 comments

  1. CobbGOPer says:

    So, which state legislator will be revealed next week as a board member of one of these banks?

    • Bill Dawers says:

      I’ll defer those who know more, but these numbers seem very high — although they may not be any higher than in many Georgia banks. By definition an insider is “an executive officer, director, or principal shareholder, and includes any related interest of such a person.”

      A 2009 Bloomberg piece that might be of interest: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aukpiXHglqP4

      This is exactly the sort of issue that the state legislative banking committees could be looking at.

    • John Konop says:

      Insider loans are set up as a red flag check to make sure they were not treated via rate,credit…….any different than a normal customer. If they were treated the same than it is a non issue, if not……….

      • Bill Dawers says:

        Well, in theory the system could work to ensure that insiders are treated the same as everyone else, but given the nature of what we’ve seen in Georgia, I’d agree with Sheila Bair at the link above: β€œI’m deeply skeptical of any kind of insider lending.”

        • John Konop says:

          Bill,

          In fairness it all depends on the transaction in my opinion. For instance in prior banks I worked for I had home loan, credit cards……from the bank. I did not get any special treatment via risk of the transaction. Obviously if you have credit worthy executives and or employees you want the business. The real issue in my opinion is more to do with how the transactions were treated and reported. Finally the checks in place to make sure tax payers were not put into undue risk via transactions via proper ratios.

      • saltycracker says:

        Shouldn’t take a GED to redflag insiders that have borrowed more than the bank’s total assets.
        What would Jack Murphy and Greg Morris say ?…..bad economy ?

    • saltycracker says:

      H,

      You saying that a director or committee member can’t walk if they shouldna loaned ’em the money ? This is America you know. πŸ™‚

      • Harry says:

        Self-dealing is not good. Many shareholders lost money. I heard there are 30,000 lawyers in Atlanta and every one of them got to eat every night.

        • Harry says:

          I can tell you this….damn near every former and current bank director in Georgia is trying to get judgement proof.

  2. seenbetrdayz says:

    By the time this is all over, we’re just going to have one gigantic consolidated bank. We’ll just call it, “The Bank.”

    Welcome to The Bank. We have the best loan interest rates, savings dividends, and customer service out of all our competitors. You can find one of our ATMs located uh, everywhere. Our staff is always ready to assist any of our members, which include everyone, except those who do not participate in banking.

    • Bill Dawers says:

      I haven’t run the numbers in a while, but Georgia will probably finish all of this — assuming another couple dozen failures — with about the same number of banks that the state had around the year 2000.

    • saltycracker says:

      Yeah, but The Bank will be covered by the full faith & credit of the govt, be able to engage in any type of money related services beyond all our imagination, all over the world and safely cross collateralized & covered by derivatives, all while leveraging 60-1 to make big bucks to keep your fees and interest down. The oligarchy is for your greater good.

      Stop by and pick up a free glass of koolaid.

      • seenbetrdayz says:

        Exactly.

        If anything, we should be needing more banks, not merging them all together into a few potential monsters that will slingshot themselves leaps and bounds ahead of the competition when (if?) we pull out of this recession.

        I feel bad for the community, mom & pop banks. The massive banks like Wells Fargo, Bank of America, etc. were at the forefront of this mess, and they got bailed out. It’s the ‘little guys’ who get folded into the bigger ones, because the bigger ones have better portfolios (because they were bailed out, see).

        Part of me thinks this is all planned. Folks can accuse me of being a ‘tin foil hatter’ if they want. It’s not like big corporations and politicans have never worked together to drive the little guys out of the market. The FDIC more and more seems to exist for that purpose.

      • seenbetrdayz says:

        I’d hope so. By that time, The Bank would be big enough where it would probably own the toaster factory, so they could cut you a really good deal.

        • saltycracker says:

          Too late, they already loaned some Russians the money to buy your toaster company from their investment banking division. And the CEO of the toaster company is on the bank board.

          Your toaster electronically transmits when and how often you use it along with your preferences in toast. Excessive use of white bread will result in the CDC contacting you and your Obamacare to be cancelled.

          DoNOT take the toaster !

  3. xdog says:

    Tom Crawford has a good piece on the Montgomery Bank & Trust, 85 years old before Lee Price allegedly gutted it. Even with two of Deal’s boys, lobbyist and ally Pete Robinson and Rep. Greg Morris serving as chair and vice-chair of the Board, they were no match for Price’s machinations.

    Dullards all. Make that greedy dullards. Greedy, negligent dullards.

    As you see, I read Crawford’s Capitol Impact column in the Flagpole. Recommended.

    http://flagpole.com/news/2012/jul/18/capitol-impact/

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