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ATLANTA (

TheStreet

) - Georgia's banking industry continues its shakeout, as more banks fail, and the state still leads with the highest number of troubled institutions.

According to data provided by SNL Financial, 37 of Georgia's 262 banks and thrifts were

undercapitalized

per ordinary regulatory guidelines as of December 31, far ahead of second-place Florida, which had 20 institutions included on

TheStreet's

fourth-quarter

Bank Watch List

.

Regulators continue clearing out the weakest players in the state, with six Georgia bank failures so far in 2011.

Georgia saw 21 bank failures during 2010, second only to Florida, with 29 failures, and ahead of Illinois, which had 16 bank failures.

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. Please click the image to expand the table.

Nonperforming assets (NPA) include nonaccrual loans, loans past due 90 days or more and repossessed assets. Government-guaranteed loan balances are excluded.

The list also includes financial strength ratings provided by

TheStreet Recommends

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 bank with the highest nonperforming assets ratio as of December 31 was

Douglas County Bank

of Douglasville. The bank was included in the

Watch List

, because its total risk-based capital ratio was 6.96%, which was below the 8% required for most banks to be considered adequately-capitalized under regulatory guidelines.

The largest bank on the list that is held by an actively-traded public holding company is

Park Avenue Bank

of Valdosta, which is the main subsidiary of

PAB Bankshares

(PABK)

. The bank had $953 million in total assets as of December 31 and a nonperforming assets ratio of 20.84%, with a very weak total risk-based capital ratio of 4.09%. The board of governors of the

Federal Reserve

issued a prompt corrective action directory to the bank on December 13, requiring it to raise sufficient capital to become adequately capitalized within 90 days or "take other necessary measures."

Georgia's Largest Banks

Here are the 10 largest banks in the state, along with key metrics as of December 31:

SunTrust Bank

of Atlanta is, by far, the largest institution in the state, and is the main subsidiary of

SunTrust Banks

(STI) - Get SunTrust Banks, Inc. Report

. The bank reported its second-straight quarterly profit in the fourth quarter, earning $131.8 million, although its return on average assets (ROA) was still low, at 0.33%.

The holding company still owes the government $4.85 billion in bailout funds received in November 2008 through the Troubled Assets Relief Program, or TARP, and is awaiting the results of the Federal Reserve's latest round of

stress tests

, which are expected to shed light on how much capital the holding company will need to raise in order to repay the government.

The second-largest Georgia bank is

Synovus Bank

of Columbus, which is held by

Synovus Financial

(SNV) - Get Synovus Financial Corp. Report

. With aggressive charge-off activity in the fourth quarter, the bank's NPA ratio declined to 3.37% from 4.82% the previous quarter. The annualized ratio of net charge-offs - loan losses less recoveries - during the fourth quarter was a high 6.87%.

Last week the

Financial Times

reported that Synovus was exploring strategic options,

including selling the holding company

, although it had not yet formally engaged its advisor

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report

to pursue a sale.

United Community Bank

of Blairsville had $7.4 billion in assets as of December 31 and inched closer to profitability with a fourth-quarter net loss of $15 million. The bank's nonperforming assets ratio was 4.32% as of December 31. The bank is held by

United Community Banks

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

, which owes $180 million in TARP money and announced on February 14 that it would

skip its next quarterly dividend

to the government.

United Community has been named by several analysts as a

takeover target

.

The best-performing subsidiary of a publicly-traded holding company among the largest 10 Georgia banks during the fourth quarter of 2010 was once again

BB&T Financial FSB

, which is a unit of

BB&T Corp.

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

, with $2.6 billion in total assets as of December 31. Despite being a relatively small subsidiary of the holding company, BB&T Financial FSB punches above its weight, earning $20.8 million during the fourth quarter, for an ROA of 3.29%. The thrift subsidiary focuses on credit card lending and also has a subsidiary specializing in issuing retail gift certificates and a wholesale mortgage unit.

Strongest Georgia Banks and Thrifts

Based on third-quarter financial reports, 15 Georgia institutions were rated B (good) or above by Weiss Ratings:

The only bank on the list that is a subsidiary of an actively-traded public company is

Invesco National Trust Co.

, which is a subsidiary of

Invesco PLC

(IVZ) - Get Invesco Ltd. Report

.

Thorough Bank Failure Coverage

Since the current wave of bank closures began in 2008, Georgia has had the most, with 57 institutions closed by regulators. Next is Florida, which has had 47 failures, then Illinois with 39 and California, with 37.

Please click

here

for a summary of last week's bank failures.

All previous bank and thrift failures since the beginning of 2008 are detailed in

TheStreet's

interactive bank failure map:

Image placeholder title

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.

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--Written by Philip van Doorn in Jupiter, Fla.

>To contact the writer of this article, click here:

Philip van Doorn

.

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.

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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 TheStreet.com 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.