Four Georgia Banks Ordered to Fix Problems

Four Georgia banks are under orders from the Federal Deposit Insurance Corporation to raise capital, clear bad loans off their books, and improve their lending methods. The FDIC action was put in place in mid-April, but just now made public. The banks are Community Bank and Trust in Cornelia; Gordon Bank in Gordon; Crescent Bank and Trust in Jasper; and Farmers and Merchants Bank in Lakeland.

Over the past year, 14 banks have been closed in Georgia by regulators--the most of any state.

Security Bank Now Under Regulatory Oversight

The Federal Reserve is keeping a close watch on Georgia's fourth largest bank as the government tries to prevent another closure.
Macon-based Security Bank is already under a cease and desist order from the Federal Deposit Insurance Corporation. The just imposed regulatory oversight means the bank will have to submit a plan to the FDIC within the next 60 days on how to strengthen its position. In the last eighteen months the bank lost 226-million dollars.
Security bank's Tom Woodbery says their challenges are not unique, but have been with them for several months.

"The challenges are quality of loans, capital stability and liquidity and those three areas are problems that a number of banks in Georgia and the Southeast are facing because of the economic crisis we're in today."

In March auditors expressed quote, "substantial doubt" about the bank's ability to stay in business. Security Bank moved into the Atlanta market during the height of the housing boom.

Bank Closing: American Southern Bank

Federal regulators have shut down American Southern Bank based in Kennesaw. That boosts the number of bank failures this year to 26-- more than all of last year. The Federal Deposit Insurance Corporation says American Southern Bank’s branches will reopen Monday as offices of the Alpharetta-based Bank of North Georgia.

(Associated Press)

Omni National Bank Closes

Regulators have shut down Omni National Bank in Georgia, marking the 21st failure this year of a federally insured bank. The Federal Deposit Insurance Corp. was appointed receiver of the bank, based in Atlanta. It had $980 million in assets as of Dec. 31.

The Office of the Comptroller of the Currency says losses have depleted the bank of most of its capital and it would have been unable to recapitalize itself without government assistance. The FDIC will release further information about its plans for the bank, the OCC said.

(The Associated Press)

FirstCity Bank Shuts Down

FirstCity Bank in Stockbridge is shut down. That makes the 18th bank in the nation the Federal Deposit Insurance Corporation has closed this year.

The FDIC will mail checks to the bank’s depositors for their insured funds Monday morning. Direct deposits from the federal government, such as Social Security and veterans’ benefits payments will be transferred to Sun Trust Bank.

(Associated Press)

Feds Shutter McDonough Bank

Regulators on Friday closed FirstBank Financial Services in Georgia and two California banks, marking nine failures this year of federally insured institutions.

The Federal Deposit Insurance Corp. was appointed receiver of the three banks. FirstBank Financial, based in McDonough, Ga., had $337 million in assets and $279 million in deposits as of Dec. 31. Alliance Bank, based in Culver City, Calif., had about $1.14 billion in assets and $951 million in deposits as of year's end. Merced, Calif.-based County Bank had around $1.7 billion in assets and $1.3 billion in deposits as of Feb. 2.

Twenty-five U.S. banks failed last year, far more than in the previous five years combined. The six failures announced in the last two weeks are double the total for all of 2007.

The FDIC said FirstBank Financial's deposits will be assumed by Regions Bank in Birmingham, Ala. Its four branches will reopen Monday as offices of Regions Bank. Regions Bank also agreed to buy around $17 million of FirstBank's assets; the FDIC will retain the rest for eventual sale.

The parent company, Regions Financial Corp., is a large regional bank company that received $3.5 billion from the Treasury Department under the government's financial rescue program. In August, Regions Bank took over deposits and some assets of another failed institution, Integrity Bank of Alpharetta, Ga.

"As a strong national institution, we believe it is our responsibility to work with and support the FDIC in finding solutions for depositors in these challenging times," Dowd Ritter, the chairman, president and chief executive of Regions Financial Corp., said in a statement.

It's expected that many more banks won't survive this year amid the pressures of tumbling home prices, rising mortgage foreclosures and tighter credit. Some may have to merge with other institutions.

The FDIC estimated that the resolution of FirstBank Financial will cost the federal deposit insurance fund $111 million while that of Alliance Bank will cost $206 million and County Bank, $135 million.

Regular deposit accounts are insured up to $250,000.

Since October, the Treasury Department has been using most of the first half of the $700 billion federal bailout fund to buy stock in banks and other financial institutions, with the idea that cash injections will spur banks to get lending again.

More information for FirstBank customers is here.

(AP)

Click here for more GPB News coverage of the banking crisis, and related reports.

5th Georigia bank fails; 2 dozen fail nationally

The Georgia Department of Banking and Finance has closed Haven Trust Bank, the fifth bank in the state to close this year and the 24th nationally. The Federal Deposit Insurance Corp. was named receiver Friday and entered into an agreement with Branch Banking and Trust of Winston-Salem, N.C., to assume Haven Trust's $515 million indeposits for $112,000. Haven Trust's four branches reopen on Monday as branches of Branch Banking and Trust, and its depositors will automatically become depositors of Branch Banking and Trust. The FDIC says depositers can access all their money over the weekend by writing checks or using ATMs or debit cards. As of December 8th, Haven Trust had assets of $572 million, and about $55 million will be purchased by Branch Banking and Trust.

(Associated Press)

4th Georgia bank fails

As the nation's recession continues, another Georgia bank has failed. The First Georgia Community Bank in Jackson becomes the fourth bank in the state seized by federal and state regulators this year. It's the 23rd in the nation. The Federal Deposit Insurance Corp. said Friday it entered a purchase and assumption agreement with Zebulon-based United Bank. Under the deal, United Bank which will take over First Georgia's deposits of $197.4 million. First Georgia has branch banks in Jackson, Covington, Griffin and Locust Grove, all of which become United Bank branches. The agency says depositors of First Georgia Community will continue to have full access to their deposits.

(Associated Press)

Fewer banks see 3Q profit

Nearly half of Georgia's insured banks are not making any money. A 3rd quarter report by the Federal Deposit Insurance Corporation, or FDIC, which insures banks and savings and loans, says 41% of Georgia's institutions were unprofitable. In the 3rd quarter of 2007, the FDIC reports only 12% of Georgia's banks and savings and loans were unprofitable.

(Atlanta Business Chronicle)

Feds: $200M lawsuit against GA credit card firm

Federal officials have filed a $200 million dollar lawsuit against an Atlanta credit card marketing firm, accusing it of deceptive practices.

The Federal Trade Commission and Federal Deposit Insurance Corporation on Tuesday filed lawsuits against Atlanta-based CompuCredit, and two out-of-state banks.

The feds say the companies, "misled" borrowers several times over a two-year period.

They allege that, in some cases, two thirds of a $300 dollar credit limit on the unsecured cards was eaten up by hidden fees.

Columbus Banking and Trust markets the cards, and were also named in the lawsuit. But rather than go to court, they agreed to pay ten million dollars in fines and restitution.

CB&T CEO Steve Melton says borrowers who took out the cards knew what they were getting into:

“...Well, they haven't been bamboozled by the small print, and the people who take these cards have been denied – and we wouldn't have issued these customers a card in the normal course of our business.”

Melton says borrowers knew what they were getting into:

“I don't want anyone to think that this market segment is a bunch of ignorant people that don't know what they're doing when they get a credit card. That's not the case.”

The feds are seeking $217 million dollars in fines and restitution from CompuCredit, and the other two banks, Wilmington-based First Bank of Delaware and First Bank & Trust of Brookings, South Dakota.

The firms deny the charges and say they'll fight the lawsuit.

FTC officials did not respond to repeated requests for comment.

If you have a credit card that bears the name of any of the following companies, or your are a CompuCredit customer, you may be eligible to receive damages: Aspen, Aspire, Aspire A Mas, Emerge, Fingerhut Credit Advantage, FreedomCard, Imagine, Majestic and Tribute.

Click here for more GPB News coverage of banking issues in Georgia, and here for more on credit card issues.