Four banks ordered to boost capital

Regulators have served four Georgia community banks with “cease and desist” orders, requiring the banks to raise capital, clear bad loans off their books and improve lending practices.

The orders, the most serious type of regulatory enforcement action short of a shutown, were made from mid-April to early May but were just made public by the Federal Deposit Insurance Corp.

The banks are: Community Bank & Trust in Cornelia; Gordon Bank in Gordon; Crescent Bank and Trust, Jasper; and Farmers & Merchants Bank in Lakeland.

The orders are the latest in a wave of regulatory actions against Georgia banks reeling from bad real estate bets. In the past year, 14 Georgia banks have been shut down by regulators, more than in any other state, including two last Friday.

The depressed real estate market, particularly around metro Atlanta, is largely to blame for the state’s banking woes.

Consider Farmers & Merchants Bank, based in the south Georgia town of Lakeland. Only one of the bank’s seven branches is located in metro Atlanta — in Covington, on Atlanta’s eastern fringe — but that’s the one causing most of the bank’s problems, said Jeff Parrish, Farmers & Merchants’ CEO.

“We’re like everybody else — the [real estate] construction and development business has affected us,” Parrish said.

Parrish said the order stems from a June 2008 exam conducted by regulators.

The biggest of the four banks, Community Bank & Trust, has nearly $1.3 billion in assets, making it one of the 15 largest banks in the state. In the first quarter, the bank reported a $2 million loss and $72 million in troubled loans.

The bank’s CEO, Charlie Miller, said the bank has “multiple options” to raise capital and will weather the downturn.

“We’re going to make it,” he said. “We just need the economy to help us a little bit, that’s all.”