United Security joins list of failed banks

By Paul Donsky

The Atlanta Journal-Constitution

Georgia's banking crisis has claimed its 26th victim: United Security Bank of Sparta, a tiny lender based in a town about halfway between Atlanta and Augusta.

The bank, founded during the Great Depression, was one of the state's smallest financial institutions until 2002, when it opened a second branch, known as the Bank of Woodstock, in the booming north Atlanta suburbs.

The bank, which had just $15 million in assets in 2001, grew tenfold by 2009 by lending in the real estate market, including construction, land development and mortgages.

United Security began to lose money toward the end of 2007 as the real estate market tanked. The bank lost $3.3 million through the first half of this year before posting a $7 million loss in the third quarter, burning through most of its capital.

Federal and state regulators shut down the bank on Friday. United Security's $150 million in deposits and most of its $157 million in assets were acquired by Ameris Bank of Moultrie in south Georgia. Both of the bank's branches will re-open as branches of Ameris.

Ameris and the Federal Deposit Insurance Corp. entered into an agreement to share losses on United Security's outstanding loans. The FDIC estimates the failure will cost its insurance fund about $58 million.