First Georgia Community Bank Closed, Boosting 2008 Toll to 23

Dec. 6 (Bloomberg) — First Georgia Community Bank of Jackson, with four offices southeast of Atlanta, was closed by regulators, becoming the 23rd U.S. bank failure this year amid losses tied to record mortgage delinquencies and foreclosures.

First Georgia, with $237.5 million in assets and $197.4 million in deposits, was shut by the Georgia Department of Banking and Finance yesterday and the Federal Deposit Insurance Corp. was named receiver. United Bank of Zebulon, Georgia, will assume First Georgia’s deposits and open the failed bank’s offices today as United branches, the FDIC said.

“Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the FDIC said in an e-mailed statement.

Regulators have closed the most banks in 15 years, with the collapses of Washington Mutual Inc. and IndyMac Bancorp Inc. among the biggest in history. November was the busiest month in more than a decade, with five institutions shut, matching the pace in July 1994, according to the FDIC.

United Bank will pay a premium of 0.8 percent to assume the failed bank’s deposits, the FDIC said, and is buying about $60.6 million of its assets with the FDIC retaining the rest for later disposition. The closure will cost the FDIC’s deposit insurance fund, supported by fees on insured banks, $72 million.

First Georgia, the state’s fourth bank to fail this year, opened in 1997 and has offices about 25 miles southeast of Atlanta in Jackson, Covington, Griffin and Locust Grove. Community Bank in Loganville, Georgia, was closed two weeks ago.

Rescue Efforts

The U.S. is seeking to boost bank capital and avert failures, using $250 billion from a bank-rescue fund enacted after the housing slump and tighter credit froze markets. The FDIC and Office of the Comptroller of the Currency in November allowed private-equity firms and other investors to buy assets and deposits of failing lenders, expanding the pool of bidders.

The FDIC on Nov. 25 classified 171 banks as “problem” in the third quarter, a 46 percent jump from the second quarter. The agency, which doesn’t name “problem” lenders, updated the assessment while reporting third-quarter industry earnings fell 94 percent to $1.73 billion from $28.7 billion a year earlier.

“We’ve had profound problems in our financial markets that are taking a rising toll on the real economy,” FDIC Chairman Sheila Bair said at a Washington news conference after releasing the report.

Foreclosures, Delinquencies

One in 10 Americans fell behind on their mortgages or were in foreclosure during the third quarter, with loans 30 days or more overdue accounting for 6.99 percent of all lending and loans in foreclosure reaching 2.97 percent, both all-time highs in a survey that goes back 29 years, the Mortgage Bankers Association said in a report today.

The FDIC oversees 8,384 institutions with $13.6 trillion in assets, and insures deposits of as much as $250,000 per depositor per bank and the same amount for retirement accounts. The agency has proposed doubling premiums charged to banks for coverage to replenish its reserves amid agency forecasts that bank failures through 2013 will cost almost $40 billion.

Washington Mutual, the biggest savings and loan, sold its assets to JPMorgan Chase & Co. Sept. 25 after customers drained $16.7 billion in deposits in less than two weeks. Wachovia Corp., the sixth-biggest bank, was pushed by regulators to sell itself or face collapse.

The Treasury as part of its bank-rescue effort has bought more than $200 billion in preferred stocks and warrants from at least 50 U.S. banks, including $25 billion each from Wells Fargo & Co., JPMorgan and Citigroup Inc., according to Bloomberg data.

To contact the reporters on this story: Ari Levy in San Francisco at; Margaret Chadbourn in Washington at

Last Updated: December 6, 2008 00:01 EST
By Ari Levy and Margaret Chadbourn

Source: Bloomberg

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.