2 more Georgia banks go under change second newsjx Two more Georgia banks fail

Georgia, already saddled with the dubious distinction of having more bank failures than any other state over the past year, added two more on Friday.

Regulators shut down two small suburban Atlanta banks, Neighborhood Community Bank of Newnan and Community Bank of West Georgia in Villa Rica. The failures are the 13th and 14th in Georgia in the past year.

Friday marked the first time that two Georgia banks failed on the same day during that stretch.

Georgia Bankers Association President Joe Brannen called the failures a “coincidence” that had more to do with bank regulators’ available staffing than an accelerating pace of failures.

But no one disputes that Georgia’s banking industry is struggling amid the recession and real estate slump. Many banks, including the two that failed on Friday, made big bets on the Atlanta region’s housing market, which boomed in the ’90s and well into this decade.

Neighborhood Community Bank’s $191 million in deposits and most of its $222 million in assets were taken over by CharterBank in West Point. Customers of Neighborhood Community, which has four branches, will automatically become depositors of CharterBank and will be able to write checks and use their ATM cards.

The Federal Deposit Insurance Corp. said the failure will cost its insurance fund $66.7 million.

No buyer could be found for Community Bank of West Georgia. Checks will be mailed to customers for their insured deposits on Monday, the FDIC said. The FDIC insures all bank deposits up to $250,000. The failure is expected to cost the FDIC insurance fund $85 million.

Community Bank, which had two branches in Villa Rica and Kennesaw, has been in trouble for some time. Regulators in May gave the bank 30 days to shore up its capital or face closure.

The steady stream of failures in Georgia has drawn national attention. The leader of a Washington, D.C. community banking organization recently told the Wall Street Journal that Georgia had become the “Chernobyl” of banking.

Georgia isn’t the only state facing a wave of bank failures. Illinois and California have also seen a large number of problems.

But several factors have made the going especially rough in Georgia. The state is overbanked, experts say, with more than 300 financial institutions battling to take deposits and make loans.

Too many banks concentrated their lending in the real estate market, making them vulnerable when that market turned.

Brannen, the bankers’ association chief, said 92 percent of the state’s banks “meet the criteria for being well capitalized by regulators and have adequate reserves to weather the ongoing stresses to the economy.”

“We clearly have banks that are struggling,” he said, but “I don’t see this as any ratcheting up of FDIC action.”

Brannen said Georgia has been a hot spot for bank failures because of the heavy concentration in recent years of many of metro Atlanta’s community banks on lending to residential developers and home builders.

“When people were no longer able to get loans, that market collapsed,” he said.

Failed Georgia Banks

Bank Closing date

Neighborhood Community Bank, Newnan, GA

June 26, 2009

Community Bank of West Georgia, Villa Rica, GA

June 26, 2009

Southern Community Bank, Fayetteville, GA

June 19, 2009

Silverton Bank, N.A., Atlanta, GA

May 1, 2009

American Southern Bank, Kennesaw, GA

April 24, 2009

Omni National Bank, Atlanta, GA

March 27, 2009

FirstCity Bank, Stockbridge, GA

March 20, 2009

Freedom Bank of Georgia, Commerce, GA

March 6, 2009

FirstBank Financial Services, McDonough, GA

Feb. 6, 2009

Haven Trust Bank, Duluth, GA

Dec. 12, 2008

First Georgia Community Bank, Jackson, GA

Dec. 5, 2008

The Community Bank, Loganville, GA

Nov. 21, 2008

Alpha Bank & Trust, Alpharetta, GA

Oct. 24, 2008

Integrity Bank, Alpharetta, GA

Aug.29, 2008

Source: FDIC Web site