It’s one of the key lessons from the financial crisis — deviating from your strategy is not a good idea.
AJC reporter Paul Donsky writes that American Southern’s business plan was clear: The Kennesaw bank would maintain a low-risk profile and lend primarily to small- and medium-sized companies.
But almost immediately after opening in 2005, the bank began lending heavily to real estate builders and developers – a strategy that backfired when the housing market collapsed.
The tiny bank began to bleed red ink and was shut down by regulators last April, following a now-familiar storyline, Donsky writes.
A federal audit released Wednesday blames American Southern’s demise in large part on a failure to adhere to its initial business plan. It’s an increasingly common finding as regulators search for root causes of the nation’s banking crisis, the most severe in at least two decades.
Thus far, regulators have conducted audits of nine Georgia bank failures. In four of those