Georgian Bank, four others in state, rapped by regulators

By Paul Donsky

The Atlanta Journal-Constitution

Federal regulators have cracked down on five more troubled Georgia banks, including Atlanta-based Georgian Bank, one of the state’s largest community banks.

Georgian is one of four banks in the state served with “cease and desist” orders in August requiring them to raise capital levels and make other changes to shore up their institutions. The orders were made public on Friday.

The other banks served with such orders are: Providence Bank, Alpharetta; Gwinnett Community Bank, Duluth; and Oconee State Bank, Watkinsville.

The FDIC also said Friday it has issued a “prompt corrective action” against American United Bank, based in Lawrenceville, requiring the bank to raise its capital levels or find a buyer or merger partner.

The order said the bank had become “significantly undercapitalized.” Bank officials could not be reached for comment.

All five banks bet heavily on the real estate market and suffered heavy losses after the economy fell into a deep recession.

Officials with Georgian Bank, the state’s fifth-largest lender with $2.2 billion in assets, declined to comment. The nearly 8-year-old bank, which was profitable through the end of last year, has seen problems explode in recent months as loan quality eroded rapidly.

At the end of the second quarter, Georgian reported $306 million in noncurrent loans, compared to $7 million the same period a year ago. In July, the bank replaced Gordon Teel, its founder and CEO, naming veteran bank consultant John Poelker the new CEO.

Providence Bank, founded in 2006, issued a news release saying its troubles are due to loan participations purchased from other banks that later failed. The bank said it is “working diligently” to mitigate risk and is making “signficant progress” toward meeting the goals of the cease and desist order.

Gwinnett Community Bank, which opened in 1999, also issued a news release saying it is suffering along with the community it serves. The bank said the cease and desist order doesn’t mean the bank is going to be closed but rather is designed to help improve the bank’s condition.