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Banks Added to Troubled List
Tuesday, 09 November 2010

State leads nation in bank failures

The Atlanta Journal-Constitution
The number of troubled banks in Georgia grew slightly in the third quarter along with the percentage of problem loans statewide, according to two reports this week on state banks.

That reversed improvements in both categories in second quarter.

The latest results suggest banks will continue to suffer through a prolonged slump caused by bad bets in real estate, said Chris Marinac, bank analyst at FIG Partners.

“If you call the recession a war, we’re still losing the war,” he said.

Georgia leads the nation in bank failures with 46 since 2008. Sixteen Georgia community banks have failed so far this year.

A report by Sterne Agee & Leach shows the number of banks with troubling Texas ratios— a measure of troubled loans to cash reserves -- grew by three to 79 during the third quarter. That was despite the failure of seven banks since June 30, removing from the troubled list.

A score above 100 shows a bank has more loans delinquent, in default or in foreclosure than it has cash reserves. The ratio is a non-regulatory measure used by analysts.

Two small Georgia lenders—Chestatee State Bank in Cumming and Enterprise Banking Co. in McDonough—topped 1,000, meaning they hold 10 times as many soured loans as they have cash in reserve.

Fourteen of the Top 20 Texas ratio banks nationally are based in Georgia, according to Sterne Agee data. That’s one more than in the second quarter.

Georgia Bankers Association President and CEO Joe Brannen said the ratios "don’t necessarily reflect the full picture of a bank’s health."

The ratio doesn't show the value of collateral backing loans, or how much the bank could receive if it forecloses and sells the property or goods, Brannen said. It also doesn't take into account a bank's ability to raise additional cash from investors.

"Texas Ratio calculations are tools for analysis and consideration, but should not be viewed as a single definitive indicator about a bank’s long-term outlook,” Brannen said.

The percentage of problem loans by dollar value at banks across the state increased slightly, to 8.6 percent, following a slight decline in second quarter, according to a report by Atlanta-based FIG Partners.

Sixty percent of Georgia’s banks reported increases in non-performing assets, which include loans late three months or more, loans banks don’t expect to be repaid and loans foreclosed.

Loans at least 30 days late also climbed slightly to 1.8 percent of total loans, meaning new problems keep emerging, Marinac said.

Marinac also noted that only 27 percent of Georgia’s banks had profitable operations excluding gains on securities, money reserved for credit losses and taxes paid.

Many of the 79 Georgia lenders with Texas ratios topping 100 will not fail, he said but likely become takeover targets by stronger lenders looking to expand.

Brand Banking Co., of Lawrenceville, for instance, announced this week a deal for $200 million in private equity investment, and that the cash would be used to shore up its balance sheet and possibly to buy up rivals. The deal is pending regulatory approval.

Texas Ratio list

The Texas Ratio compares problem and foreclosed loans and cash reserves. A score above 100 shows a bank has more loans delinquent, in default or in foreclosure than it has cash reserves. The ratio is a non-regulatory measure used by analysts. Here are the Georgia banks with scores over 100. (Source: Sterne Agee & Leach)

Bank/Texas Ratio

Chestatee State Bank--1,085

Enterprise Banking Company--1,037

Montgomery Bank & Trust--907

North Georgia Bank--755

Habersham Bank--681

Oglethorpe Bank--647

American Trust Bank--590

First State Bank--582

Security Exchange Bank--563

Douglas County Bank--539

Darby Bank & Trust Company--521

United Americas Bank, National Association--514

Mountain Heritage Bank-- 507

Patriot Bank of Georgia--457

McIntosh State Bank-- 449

First Choice Community Bank--438

New Horizons Bank-- 413

Gwinnett Community Bank--389

Citizens Bank of Effingham--373

Park Avenue Bank--365

Atlantic Southern Bank--350

CreekSide Bank--347

High Trust Bank--334

Piedmont Community Bank--325

Community Bank of Rockmart--309

Providence Bank--300

First Cherokee State Bank--297

Tifton Banking Company--292

Farmers & Merchants Bank--289

Bartow County Bank-- 281

Decatur First Bank-- 265

First Citizens Bank of Georgia-- 260

Georgia Trust Bank-- 251

Peoples Bank of Conyers-- 250

WestSide Bank-- 249

Northside Bank-- 245

Sunrise Bank-- 237

Citizens State Bank-- 231

Hometown Community Bank-- 226

Capitol City Bank & Trust Company-- 224

Jasper Banking Company--222

Covenant Bank & Trust-- 216

Peoples Bank & Trust-- 215

Community Capital Bank--211

Community Bank & Trust-- 202

Patterson Bank-- 194

Georgia Heritage Bank--192

Eastside Commercial Bank-- 192

Central Bank of Georgia-- 190

Legacy State Bank-- 189

One Georgia Bank-- 189

First Georgia Banking Co.-- 189

Heritage Bank-- 187

Bank of Newington-- 174

First Covenant Bank-- 171

PlantersFirst-- 165

Brand Banking Co.-- 164

First National Bank of Chatsworth-- 160

State Bank and Trust Co.-- 159

Farmers Bank--157

Community & Southern Bank-- 146

Community Bank of the South--145

First State Bank-- 140

Bank of Georgia-- 140

Piedmont Bank-- 130

Affinity Bank-- 126

Peach State Bank & Trust-- 125

Trust Bank-- 123

Global Commerce Bank-- 121

Farmers & Merchants Bank-- 120

Cherokee Bank, National Association-- 117

Signature Bank of Georgia-- 117

Bank of Perry-- 114

First Southern National Bank-- 113

Frontier Bank--105

Heritage Bank--105

Embassy National Bank-- 103

Community Bank of Pickens County-- 102

First National Bank of Griffin-- 101


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