No. 75: Henry County bank closed

By J. Scott Trubey

The Atlanta Journal-Constitution

The First State Bank, the last remaining bank based in Henry County, was seized and sold Friday by regulators.

Hamilton State Bank, based in Hoschton, acquired First State and its seven Henry branches in a loss-share transaction with the Federal Deposit Insurance Corp. Those branches will reopen under normal business hours beginning Saturday.

First State is the first failure in Georgia this year and the nation-leading 75th to fail in the state since mid-2008.

Henry has been among the hardest hit counties in Georgia’s banking crisis. Ten banks that had at least a branch in Henry have failed, including the five that were based in the county when the Great Recession started.

Metro Atlanta’s once surging Southside was once so hot, community banks sprouted up or moved their headquarters there to tap into the real estate gold rush. But Stockbridge-based First State was an old hand in Henry, founded in 1964. It also was the county's largest bank by deposits as of last June, the latest data available, outsizing even Wells Fargo and SunTrust there.

Hamilton State assumed all of First State’s $527.5 million in deposits and the bulk of its $536.9 million in assets from the FDIC. The FDIC said the failure will cost its Deposit Insurance Fund, the backstop that protects deposits, $216.2 million.

First Bank officials tried to hold on through the real estate crisis, said Walt Moeling, a bank attorney with Bryan Cave in Atlanta. But, he said, the bank could no longer absorb losses from struggling borrowers, nor withstand plummeting real estate values, worsened in part by the local failures.

Buyers of failed banks, backed by government guarantees on loan losses, dispose of distressed properties in cleaning up the books, which has further lowered values.

Entering the recession, more than half of First State's loans were in land acquisition and development, according to FDIC data.