ATLANTA ( TheStreet) -- Georgia regulators closed Georgian Bank of Atlanta Friday, bringing the total number of failed U.S. banks and thrifts this year to 95. The Georgia Department of Banking and Finance took over Georgian Bank late Friday and appointed the Federal Deposit Insurance Corp. receiver. The FDIC then arranged for all of the failed institution's deposits and essentially all of its assets to be assumed by First Citizens Bank and Trust of Columbia, S.C. The acquiring bank is a subsidiary of First Citizens Bancorp ( FCBN). Georgian Bank specialized in construction lending to residential developers in the suburbs of Atlanta and also provided private banking services to businesses and wealthy depositors. More than half of the bank's assets were concentrated in construction loans and commercial real estate loans. Credit quality took a nosedive in the second quarter, with nonperforming assets -- including nonaccrual loans and accruing loans past due 90 days or more, along with repossessed real estate -- making up 17.19% of total assets as of June 30. That marked a deterioration from the previous quarter, when the nonperforming assets ratio was 5.13%. On Friday, the FDIC made public regulatory orders it had given Georgian Bank on Aug. 24, including a cease-and-desist order citing ineffective supervision by the bank's board of directors and inadequate capital levels. The order also cited lax underwriting standards and an inadequate liquidity plan, and it required the bank to increase its capital ratios within 120 days in order to maintain a Tier 1 leverage ratio of at least 8% and a total risk-based capital ratio of at least 10%.
These ratios need to be at least 5% and 10%, respectively, for most banks to be considered well-capitalized under regulatory capital guidelines. The Tier 1 leverage and total risk-based capital ratios for Georgian Bank were 6.30% and 8.59%, respectively, as of June 30. Georgian Bank had roughly $2 billion in total assets and $2 billion in deposits when it failed, and its five branches were set to reopen Monday as branches of First Citizens Bank. The FDIC entered into a loss-sharing agreement with First Citizens, with the agency agreeing to share in losses on all of the acquired assets. The FDIC estimated the cost to its insurance fund would be $892 million, reflecting the high loss rate on soured construction loans.
Ongoing Bank Failure CoverageAll bank failures for 2008 and 2009 through last week are detailed in TheStreet.com's interactive bank failure map. Georgia leads all states with 24 bank or thrift failures during 2008 and 2009, followed by Illinois with 17, California with 14, Florida with eight and Nevada with five. J.P. Morgan Chase ( JPM), which acquired Washington Mutual, the largest-ever bank or thrift to fail in the U.S., is among the large bank holding companies that have acquired failed institutions during 2008 and 2009. Others include SunTrust Banks ( STI); Regions Financial ( RF); Fifth Third Bancorp ( FITB); U.S. Bancorp ( USB); Zions Bancorp ( ZION); PNC Financial ( PNC); and BB&T ( BBT).
Free Financial Strength RatingsTheStreet.com Ratings issues independent and very conservative financial strength ratings on each of the nation's 8,500 banks and savings and loans. They are available at no charge on the Banks & Thrifts Screener.
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