Georgia banks continue to look for ways to raise much needed money, even if it means selling off bits of the company.
Troubled Appalachian Banchsares is considering selling a small subsidiary banking unit in an effort to ease the company’s mounting financial woes.
The federally-charted unit includes branches in Georgia, Tennessee and North Carolina, accounts for less than 10 percent of the company’s business. But because it’s nationally chartered it offers banking across state lines, which could prove valuable.
Officials at the banking company, based in Ellijay in north Georgia, stressed no deal has been reached.
“We’re exploring all avenues as we put together a capital growth plan,” said Danny Jett, the company’s interim chief operating officer.
Like many Georgia banks, Appalachian has been reeling from losses tied to the collapsed real estate market. It is under a “cease and desist” order to improve its finances and operations.
Jett said he hoped to finalize a plan to raise capital in the next two months that may or may not include selling off the thrift.
Appalachian Bancshares is essentially is made up of two distinct lenders – a state-chartered institution, Appalachian Community Bank, and a much smaller thrift, Appalachian Community Bank FSB, or federal savings bank.
The thrift, based in McCaysville, near the Georgia-Tennessee border, has $93 million in assets, compared to more than $1 billion for the state bank. It operates three branches in McCaysville, Murphy, N.C. and Ducktown, Tenn.
Like many Georgia banks, Appalachian has been hobbled by bad real estate loans.
The holding company has lost $52 million this year, including $20 million in the third quarter. About $2 million of those losses are attributable to the thrift, records show.
About $117 million in loans are in the most severe stage of delinquency, including $6 million at the thrift.
“The thrift has its challenges, just like any bank has, with loans in some distress,” Jett said.
In addition to its financial struggles, Appalachian voluntarily de-listed its stock from the Nasdaq exchange in October after its stock – which traded over $20 a share in 2007 – sank below $1.
Last month, the bank placed its CEO and two other top executives on administrative leave pending an internal review into possible violations of bank policy.
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