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) -- Georgia banks saw significant improvements during the first quarter, with 81% institutions in the Peach Tree State showing profits, up from less than 60% in the fourth quarter.

The improvement was even stronger than the trend seen for

Florida banks

, although Georgia still leads all states with 28 undercapitalized institutions on



Bank Watch List

, with Florida in second place, with 20 undercapitalized banks.

The largest Georgia bank to fail so far this year was The First State Bank of Stockbridge, which was shuttered by state regulators in January, and sold by the Federal Deposit Insurance Corp. to

Hamilton State Bank

of Hoschton, Ga.

Since the Watch List is based solely on capital ratios, we take a different approach on our quarterly coverage of banks in key states, by looking at overall credit quality to identify troubled institutions.

Georgia Banks with Weakest Asset Quality

The following list includes all banks in the state with nonperforming assets comprising more than 15% of total assets as of March 31, according to data supplied by Thomson Reuters Bank Insight:

Nonperforming assets (NPA) include nonaccrual loans, loans past due 90 days or more and repossessed assets. Government-guaranteed loan balances are excluded. The ratio of net charge-offs to average loans is annualized.

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The total risk-based capital ratios needs to be at least 8% for most institutions to be considered

adequately capitalized

by regulators and 10% for most to be considered well-capitalized. Most of the undercapitalized banks on the above list are operating under regulatory orders to achieve and maintain total risk-based capital ratios higher than 10%.

The list also includes financial strength ratings provided by Weiss Ratings. Weiss Ratings uses a very conservative ratings model, placing the greatest weight on capital strength, credit quality and earnings stability to assign ratings ranging from A-plus (Excellent) to E-minus (Very Weak).

The Georgia institution with the highest level of nonperforming assets as of Dec. 30 was

Security Exchange Bank

of Marietta, which had $157 million in total assets and a rather astounding nonperforming assets ratio of 45.74%. The bank was undercapitalized, with a total risk-based capital ratio of 3.97%, and is still operating under a March 10, 2009 cease and desist order from the FDIC and Georgia regulators, requiring the bank to raise sufficient capital to achieve a total risk-based capital ratio of 10%, within 60 days of the order.

Largest Georgia Banks

Here are the 10 largest banks headquartered in Georgia, along with key metrics as of March 31:

The largest Georgia bank is

SunTrust Bank

of Atlanta -- the main subsidiary of

SunTrust Banks

(STI) - Get SunTrust Banks, Inc. Report

-- which had $172.3 billion in total assets as of March 31. SunTrust Bank also has the leading deposit market share in the state, with 19% of Georgia deposits as of June 30, 2011, according to the most recent FDIC data.

SunTrust Bank's first-quarter return on average assets (ROA) was 0.61%, improving from 0.39% in the fourth quarter, and 0.24% in the first quarter of 2011.

The holding company's stock closed at $22.72 Tuesday, returning 29% year-to-date, following a 40% decline during 2011. The shares trade for 0.9 times their reported March 31 tangible book value of $25.49, and for 8.5 times the consensus 2013 earnings estimate of $2.68 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $1.91.

UBS analyst Greg Ketron rates SunTrust's stock a "Buy," with a $27 price target, saying on May 14 that he believes "environmental costs will continue to decline going into 2013 given better visibility on mortgage repurchase costs and the positive benefit from stabilized markets on problem asset-related costs."

Interested in more on SunTrust? See TheStreet Ratings' report card for

this stock


The second-largest Georgia bank is

Synovus Bank

of Columbus, with $26.8 billion in total assets as of March 31. The bank's holding company,

Synovus Financial

(SNV) - Get Synovus Financial Corp. Report

, owes $967.9 million in federal bailout funds received through the Troubled Assets Relief Program, or TARP, in December 2008.

Synovus Bank's first-quarter ROA was a respectable 0.78%, improving from 0.77% the previous quarter and a negative 0.79% a year earlier.

On the holding company level, Synovus Financial reported first-quarter net income available to common shareholders of $21.4 million, or 2.4 cents a share, compared to earnings to common shareholders of $12.8 million, or 1.4 cents a share in the fourth quarter, and a net loss to common shareholders of $93.7 million, or 11.9 cents a share, during the first quarter of 2011.

Sterne Agee analyst Todd Hagerman on Tuesday included Synovus Financial among five bank holding companies "potentially"

at risk

from mandatory stress tests that will be required by regulators later this year.

Hagerman rates Synovus "Underperform," with a $2.00 price target, and said in April that he expected to repay TARP in "2013 at the earliest," and that "although most credit measures continued to show incremental improvement, problem asset levels remain exceedingly high."

The analyst estimates that Synovus will earn five cents a share this year, followed by 2013 EPS of 15 cents.

Synovus's shares closed at $1.91 Tuesday, trading for 0.9 times tangible book value, and 11 times the consensus 2013 EPS estimate of 18 cents. The consensus 2012 EPS estimate is 10 cents.

Interested in more on Synovus? See TheStreet Ratings' report card for

this stock


The third-largest Georgia bank is

United Community Bank

of Blairsville, with $7.2 billion in total assets as of March 31. The bank earned $13.7 million during the first quarter, compared to $14.2 million the previous quarter, and a loss of $235.0 million during the first quarter of 2011, when the holding company

United Community Banks

(UCBI) - Get United Community Banks, Inc. Report

reported $231.6 million in net charge-offs, as part of its accelerated plan to dispose of problem loans and reposed properties.

United Community Banks owes $180 million in TARP money. The holding company's shares closed at $8.32 on Tuesday, returning 19% year-to-date, after falling 28% last year. The shares trade for 1.3 times tangible book value, and for 11 times the consensus 2013 EPS estimate of cents. The consensus 2012 EPS estimate is 71 cents.

FIG Partners analyst Christopher Marinac rates United Community Banks "Market Perform," with a $10 price target, saying on May 8 that "the stock should trade at 12x forward EPS in 2013 and a modest premium to our future tangible book value estimate including the partial recapture of valuation allowances on its DTA-Deferred Tax Allowance."

The company reported that as of March 31, its allowance for deferred tax assets totaled $274 million.

Marinac estimates that United Community Banks will earn 62 cents a share this year, followed by earnings of 83 cents a share during 2013.

Interested in more on United Community Banks? See TheStreet Ratings' report card for

this stock


Among Georgia's largest 10 banks,

BB&T Financial FSB

continues to post the strongest earnings results, with a first-quarter net income of 45.92 million and an ROA of 6.96%.

With $2.7 billion in assets, the thrift is a relatively small subsidiary of

BB&T Corp.

(BBT) - Get BB&T Corporation Report

of Winston-Salem, N.C., but contributes very solid profits by focusing on credit card lending, with a subsidiary specializing in issuing retail gift certificates, as well as a wholesale mortgage lending unit.

Interested in more on BB&T? See TheStreet Ratings' report card for

this stock


Strongest Georgia Banks and Thrifts

Based on fourth-quarter financial reports, only nine out of 236 Georgia institutions were assigned "recommended" ratings of B-plus or above by Weiss Ratings:

The list is sorted by rating, and then alphabetically by institution name.

All of the Georgia banks and thrifts on Weiss's recommended list were strongly capitalized as of March 31, with total risk-based capital ratios exceeding 15%, while all but two had total risk-based capital ratios exceeding 20% or twice the level most institutions need to be considered well-capitalized by regulators.

Thorough Bank Failure Coverage

There have been four bank failures in Georgia this year, following 23 closures in 2011, 21 in 2010, and 25 in 2009.

Since the current wave of bank and thrift closures began in 2008, Georgia has seen 78 institutions closed by regulators, which is the most for any state, and is trailed by Florida, with 61 failures, Illinois with 50, and California, with 39 institutions shut down since the beginning of 2008.

All 423 U.S. bank and thrift closures since the beginning of 2008 are detailed in


interactive bank failure map:

The bank failure map is color-coded, with the states having the greatest number of failures highlighted in dark gray, and states with no failures in light green. By moving your mouse over a state you can see its combined 2008-2011 totals. Then click the state to open a detailed map pinpointing the locations and providing additional information for each bank failure.


Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here:

Philip van Doorn


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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.