ATLANTA ( TheStreet) -- Georgia, the state with the highest number of bank failures during the credit crisis, has about as many institutions with critically poor loan quality as it does those in strong shape.

With the Atlanta area as the eye of the storm for residential-building loans that have gone bust, Georgia has had 24 bank and thrift failures this year and last, the most for any state, followed by Illinois, with 15, California, with 14, and Florida, with eight.

Georgia's 313 banks and savings and loan associations include 17 with critically poor loan quality and 18 in strong shape, according to a review by TheStreet.com Ratings using the most recent complete figures as of June 30.

The most recent Georgia failure was Georgian Bank of Atlanta, which was shut down by state regulators Sept. 26, with deposits sold by the Federal Deposit Insurance Corp. to First Citizens Bancorp ( FCBN) of Columbia, S.C.

The largest failed Georgia bank in this credit cycle was Silverton Bank NA of Atlanta, which had $4.1 billion in total assets when it was closed by the Office of the Comptroller of the Currency in May. The FDIC was unable to line up a buyer for the failed bank's deposits.

Large holding companies taking advantage of bank failures to expand market share in the state have included Regions Financial ( RF), which assumed all the deposits of Integrity Bank of Alpharetta when it failed in August 2008, and BB&T ( BBT), which took over the deposits of Haven Trust Co. of Duluth, when it was shuttered in December. (See TheStreet.com's enhanced interactive Bank Failure Map for a summary of failed banks and thrifts.)

Georgia Banks With the Weakest Loan Quality

Fifteen Georgia institutions were included in TheStreet.com's list of Undercapitalized Banks and Thrifts, which was published Aug. 28 and based on June 30 financial reports. Of 116 undercapitalized institutions on the list, 14 have failed. From 89 banks and thrifts on a similar list published in May, more than half have failed.

There were 45 Georgia banks and thrifts with nonperforming-assets ratios above 10% as of June 30, the most for any state, although Florida ran a close second, with 42. Nonperforming assets include nonaccrual loans, accruing loans past due 90 days or more and repossessed real estate.

Georgia Banks and S&Ls with Nonperforming Assets Exceeding 15%
chart
Source: SNL Financial

All of the listed banks were assigned financial-strength ratings of E-plus (very weak) or lower.

Strongest Georgia Banks and Thrifts

Based on June 30 financial reports, 18 Georgia institutions were rated B-plus (good) or above, down from 24 the previous quarter.

Georgia Banks and S&Ls Rated B+ or Higher
chart
Source: SNL Financial

TheStreet.com Ratings uses a very conservative model to assign bank and thrift financial-strength ratings, placing the greatest weight on capital strength, credit quality and earnings stability.

Most of the highest-rated Georgia banks and thrifts had nonperforming-asset ratios of less than 1%. Those that didn't had total risk-based capital ratios greatly exceeding the 10% required for most institutions to be considered well-capitalized under regulatory guidelines. In fact, 10 of the 18 had total risk-based capital ratios exceeding 20%.

The largest Georgia bank with a rating of B-plus or higher was First American Bank and Trust Co. of Athens, which had $374 million in total assets as of June 30, and was assigned a financial-strength rating of A-minus (excellent).

Largest Georgia Institutions

The following includes capital, earnings and asset-quality indicators for the 10 largest banks and thrifts with headquarters in Georgia.

10 Largest Georgia Banks and S&Ls
chart
Source: SNL Financial

Banking in the state is dominated by SunTrust Bank, the main subsidiary of SunTrust Banks ( STI), which had $170 billion in assets as of June 30. The bank's D-minus (weak) rating was driven by three consecutive quarterly losses, along with declining asset quality and an annualized charge-off ratio in excess of its ratio of loan-loss reserves to total loans.

Synovus Financial ( SNV) of Columbus is another big player in the state, with 15 of 31 subsidiary banks located in Georgia, including three among the 10 biggest: Columbus Bank & Trust, Bank of North Georgia of Alpharetta and AFB&T of Athens.

Synovus is set to report third-quarter earnings Oct. 22 and was recently profiled as part of TheStreet.com's Is It Safe? series.

The second-largest bank in the state was United Community Bankof Blairsville, the main unit of United Community Banks ( UCBI). United Community's D rating reflected four consecutive quarterly net losses, a high net charge-off ratio and a continued increase in nonperforming loans. Still, regulators were confident enough in United Community to approve its acquisition of the failed Southern Community Bank of Fayetteville in June.

Wachovia Card Services, now a subsidiary of Wells Fargo ( WFC), is also among the 10 biggest institutions headquartered in the state. With the high rate of loan charge-offs expected during this economic climate, along with a strong capital base and continued profits, the institution was assigned a C (fair) financial-strength rating.

Free Bank and S&L Ratings

An important factor in limiting the number of bank failures during the current crisis was the temporary increase of the FDIC's basic limit on individual deposit insurance coverage to $250,000 from $100,000. The increase has been extended through 2013.

An even more important step that prevented deposit runs on banks has been the FDIC's temporary waiver of deposit-insurance limits for business-transaction accounts (checking accounts). The waiver is set to expire June 30, 2010, after which business-checking accounts will revert to the $100,000 limit.

That means it will be more important than ever for business and municipal entities such as school districts to carefully monitor the health of their banks. It's very easy to have more than $100,000 of somebody else's money flowing through a business account.

TheStreet.com Ratings issues independent and very conservative financial-strength ratings on the nation's 8,500 banks and savings and loans. They are available at no charge on the Banks & Thrifts Screener.

-- Reported by Philip van Doorn in Jupiter, Fla.
Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, 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.

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