Power Breakfast: Georgia continues to lead in bank failures, cheating scandal, Jim Donnan, Murdoch

Georgia continues to lead the nation in bank failures.

Regulators seized and sold two more struggling metro Atlanta banks late Friday — the 15th and 16th failures in Georgia this year, AJC writer Scott Trubey reports.

Stockbridge-based High Trust Bank and Atlanta-based One Georgia Bank were seized and sold to Ameris Bank of Moultrie, Trubey writes. The banks will reopen under the new flag during normal business hours, the Federal Deposit Insurance Corp. said.

Georgia leads the nation with 67 failures since mid-2008, Trubey reports.

High Trust had total assets of $192.5 million and deposits of $189.5 million, and One Georgia had total assets of $186.3 million and deposits of $162.1 million, according to the latest FDIC data.

The regulator estimates the failures will result in a $110.4 million combined loss to its insurance fund, which protects depositors, Trubey writes.

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12 comments Add your comment

Peachy

July 18th, 2011
6:26 am

It is unbelievable to me that the people of Georgia have not demanded more regulations for community and State banks. It appears that residents are not making the correlation between failed banks and lower property values that have resulted as the banks/developers default on their obligations.

double

July 18th, 2011
6:48 am

Get a loan on inflated/over appraised property.File bankruptcy let others pay.Need better regulations in this state.

Road Scholar

July 18th, 2011
7:21 am

Peachy: At least we lead the nation in something other than congestion! This is proof that businesses need regulation, but the conservatives will never let it happen. Who made money on this? Repub legislators who were on the boards and large investor/loan takers, that’s who! While , with the constant reminder that they are Christian, I wish that people actually knew what that means and abides by an honest way of living!

Marlboro Man

July 18th, 2011
7:33 am

When will stealing from a bank bring jail time, look at the salaries of the folks that ran these banks into the ground. Shareholders should be angry and want justice.

bobDawg

July 18th, 2011
7:44 am

I talked to a solid Bank/Banker Friday and he said we have another 60 – 80 banks to go that will either merge or fail and get bought out…. He feels the Reg. now only wants about 100 banks nationwide and is encouraging these with crazy regulations that are unattainable…

DawgInaTruck

July 18th, 2011
8:17 am

MM, stealing from a bank SHOULD bring jail time but now top executives are not only getting away with it, they are fnding ways to profit from it. How this is not being investigated by the regulators or reported on by the AJC is beyond me.

On June 17th of this year a south metro bank failed and was seized by the FDIC, which estimates the total cost to the Deposit Insurance Fund will be $80.0 million. That means you and I will wnd up paying it eventually.

The top two executives of the failed bank landed well paying, executive positions with the bank that purchased the failed institution because the “Good Ole Boy’ system is alive and well in the banking industry. One of these fellas went to college with a top executive at the purchasing bank. There are not only no consequences for ruining a bank, costing taxpayers and shareholders millions in the process, there is great gain in it for these guys.

While they left a trail of destruction in their wake, it is business as usual for them. I live in the same small town the failed bank is in and it amazes me that this is allowed. Now we are hearing the purchasing bank has plans to buy other failed ones, possibly even allowing directors of the failed bank to invest in these purchases. The rank and file shareholdres and taxpayers foot the bill while the very bankers who ran the bank in the ground walk away, again with no consequences but instead to financial gain.

If there is an outrage to the entire situation, that is definitely it. The regulators and the banking department, however, seem content to look the other way. It is baffling.

Steven

July 18th, 2011
10:11 am

Just to clarify, the FDIC insurance fund is not taxpayer funded so the taxpayers have nothing to do with this. Banks pay the premiums into the fund so it is self-funded Secondly, the shareholders knew the risks inherent in their investments. They weren’t guaranteed a return from their investment. You can’t feel sorry for them.

Also, community banks aren’t failing because of bad mortgages. They are failing due to write-downs in value on real estate they now own, losses on the sale of this real estate and lack of interest income on the commercial loans that are now not paying. Unbelieveably, the majority of these institutions fail due to losses that are paper losses. They haven’t even been realized yet. The typical community bank does the majority of its business on the commercial side. Consumer mortgages and the values underlying them aren’t even playing a part here.

southern white boy

July 18th, 2011
10:35 am

we lead the nation in banks closed, and probably in the number of banks that are on the edge. and the respective banking committees of the georgia legislature have not had a single hearing on the matter, nor has the general assembly taken any action to increase oversight or require the banks to get their house in order. the legislature is owned by the banking community. sad.

DixieDemons

July 18th, 2011
11:58 am

It is a reflection of the high ethical standards Georgians have.

DawgInaTruck

July 18th, 2011
12:02 pm

Steven, there a couple of flaws in your response. We as taxpayers will foot the bill for the mismanagement of banks if we want to have a bank account. Banks are already raising fees for everything, deposit and loan related. Customers will have these losses passed on to them.

Also, many community banks’ losses are in fact real; as they have sold property at reduced prices they have used up capital to make up the shortfall. And these losses are due to grossly inflated loan portfolios that consisted of acquisition and development loans on vacant and/or undeveloped subdivision and construction loans on houses that did not sell.

Bankers were addicted to fee and interest income and gained a false sense of security, mistakenly assuming that continued demand for housing and the continued increase in property values would drive the market. Their growth strategies were based on this vey assumption and they missed horribly.

I also say some sympathy is due the rank and file shareholders. While their investments were surely at risk in any environment they trusted these folks with their savings and were told how safe their investment was. Greed and a lack of foresight by many bankers led to this crisis. Senior Management and Boards of Directors should most assuredly be held accountable.

Cy

July 18th, 2011
2:00 pm

“Senior Management and Boards of Directors should most assuredly be held accountable.”

Board (non)governance is a huge factor in the GA community bank fiasco.

These boards frequently are made up of local luminaries who add some cachet of respectability but who often are clueless when it comes to running a bank. I recall an AJC article awhile back in which a director of a failed GA bank was asked why he allowed mismanagement and other shenanigans to bring down his bank. His response was something like, ‘I was only a director, how was I supposed to know about that?’.

bank me

July 18th, 2011
9:53 pm

bankers made millions from all this fraud and the taxpayers are on the hook for billions in bailout cash.