Georgia’s community banks wait for their piece of bailout pie

Washington — As the government begins the second round of its bailout of the financial industry, community bankers like Judy Turner in Decatur are wondering if they’ll finally get their share.

Turner, CEO of Decatur First Bank, has been waiting since before Thanksgiving to hear if her small bank will receive any funding from the Treasury Department.

She has requested up to $5.2 million — a pittance compared to the billions that big banks in Georgia and elsewhere have already received.

“I know they are talking of helping the banks, which I’m always happy to hear, but I don’t know if that will trickle down to our level of bank,” Turner said.

Small community banks like Turner’s are the backbone of the banking business in Georgia and other states. The vast majority of Georgia’s 335 financial institutions are community banks, loosely defined as those with under $1 billion of assets.

But when it comes to the government’s attempts to rebuild the country’s shattered credit markets, they’ve taken a distant backseat to the big boys.

Georgia lawmakers in Washington have been deluged with hundreds of phone calls from concerned and angry bankers.

There’s no official list of banks that have applied for funds from the Troubled Asset Relief Program, but Georgia Sen. Saxby Chambliss’ staff said at least 75 community banks in Georgia have sought them. Of those, only two have received any funding. Most, like Turner’s bank, have not received any response to their requests.

“It’s unacceptable that only two community banks in Georgia have had their applications acted on by Treasury,” said Joe Brannen, president of the Georgia Bankers Association. “We would like those applications that are pending could receive a yes or no answer so these banks will know.”

In announcing a new phase of the financial industry bailout on Tuesday, Treasury officials gave little information about how community banks fit into their plans — although they expect to release details of a new plan designed specifically for small business and small banks later this week.

The so-called Small Business and Community Bank Lending Initiative is designed to encourage small banks to make more loans with the help of the U.S. Small Business Administration and new Federal Reserve funding. Treasury officials said Tuesday that the program, which they plan to announce in the next few days, will be designed to help community banks that they acknowledge were overlooked not only during the current financial crisis but over the last several years.

Chambliss, who has met with worried bankers from Georgia for months now, said he’s waiting to see the proof in the pudding.

“All of that is going to sound good, and it’s going to sound like the money’s going to start flowing to the so-called Main Street banks,” said Chambliss, a Republican, in an interview Tuesday. “But the fact is, we’ve heard that before. Until we see it happening from a practical standpoint, we’re going to have to keep our foot on their throats to make sure money does flow,” he said.

According to Chambliss, about 40 community banks in Georgia “are really struggling” and could be teetering on the brink of failure without federal help. He said Georgia and Nevada have some of the worst banking problems of any state, mainly because of the devastated housing and mortgage markets.

The private equity market, usually a source of funding for banks, has largely dried up amid the financial crisis — and the few investors willing to put money in banks are charging high rates. That, coupled with the rapidly deteriorating economy, led many Georgia community banks to seek TARP funds, available at a relatively low cost.

Chambliss and Georgia Sen. Johnny Isakson, also a Republican, have written several terse letters and met with Treasury officials to try and get federal relief money flowing to Georgia’s community banks.

“I was satisfied that they had reserved money for community banks, but I was very dissatisfied that it’s so slow getting deployed,” Isakson said recently.

Like Chambliss, Isakson has received hundreds of phone calls from Georgia community bankers and their customers in recent months seeking help with the Treasury bailout.

Rep. Phil Gingrey, R-Marietta, even took the issue directly to President Barack Obama a few weeks ago, when Obama met with congressional Republicans.

“He looked me right in the eye and he said, ‘We are working on that,’” Gingrey said.

Turner, the Decatur banker, said her company has been able to keep making loans, thanks in large part to money raised by the bank’s board of directors. But she worries about the future, saying the government must pay more attention to community banks like hers.

“If we don’t have money to lend, it’s going to be very difficult for anybody to move forward and recover financially,” she said.

FEDERAL MONEY

The federal government has so far invested in eight Georgia banks.

Bank	amount
SunTrust (Atlanta)	$4.85 billion
Synovus (Columbus)	$973 million
United Community (Blairsville)	$180 million
Ameris (Moultrie)	$52 million
Fidelity Southern (Atlanta)	$48 million
Colony Bancorp (Fitzgerald)	$28 million
The Queensborgh Co. (Louisville)	$12 million
Metro City (Doraville)	$7.7 million