Regulators swept into Georgia Friday and seized three more Georgia banks as the crisis among small lenders continues to show no signs of abating.
The failures hit the North Georgia Mountains particularly hard. Two of the three collapsed lenders were based in Northeast Georgia.
Ellijay-based Appalachian Community Bank, Bank of Hiawassee in Towns County and Century Security Bank of Duluth were seized by regulators and sold by the Federal Deposit Insurance Corp.
Appalachian Community was acquired by Community & Southern Bank of Carrollton, Ga.; Bank of Hiawassee was bought by Citizens South Bank of Gastonia, N.C.; and Century Security was picked up by the Thomason, Ga.-based Bank of Upson.
Branches of the failed lenders will reopen Saturday under their new names.
Appalachian Community also operated branches under the name Gilmer County Bank, and Bank of Hiawassee operated branches under the names Bank of Blue Ridge and Bank of Blairsville. Its thrift subsidiary, Appalachian Community Bank FSB of McCaysville, Ga., is not affected by the failure and will continue to operate as usual.
Georgia now leads the nation with 35 bank failures since August 2008. Five Georgia banks have now failed in 2010, and many more are expected to follow.
The failure of the two mountain banks come seven weeks after the forced sale of Community Bank & Trust of Cornelia to South Carolina Bank & Trust.
Mountain communities with little industry have been ravaged by the recession as tourism has dried up, and demand for vacation homes has plummeted.
Many North Georgia community banks have little other loan business than residential real estate.
Appalachian Community was the largest of the three Georgia failures. It had $1 billion in assets and $917.6 million in deposits.
Its 10 branches will reopen Saturday as Community & Southern, a recently formed bank backed by private equity investors that was created to acquire wounded lenders. Community & Southern is headed by former bank regulator and noted turnaround specialist Pat Frawley.
Community & Southern agreed to acquire $798 million of the failed bank’s assets under a loss-share transaction with the FDIC.
Bank of Hiawassee had $377.8 million and $339.6 million in deposits when it failed. Citizens South Bank assumed $232 million of the failed bank’s assets in a loss-share agreement.
Century Security was acquired in a loss-share transaction by Thomason-based Bank of Upson, which agreed to assume most of the bank’s $94.2 million in deposits and most of its $96.5 million in assets.
The expected loss to the FDIC’s Deposit Insurance Fund is expected to be $586.9 million for all three lenders combined.
