Banker bitten by bad real estate bets

There was the chef who formerly worked for the British royal family. The yacht and South Georgia hunting plantation. The private jet access.

A lot has changed in a year for Gordon Teel Sr., the former chairman, president and CEO of the failed Georgian Bank.

Teel, who resigned from Georgian in July 2009, a few months before the bank collapsed, is awash in civil lawsuits and recently defaulted on $4.7 million in outstanding debt. The holding company for his hunting plantation filed July 2 for bankruptcy protection.

Teel and another former bank director are the subject of a shareholder lawsuit. And directors and senior officers at the bank were recently put on notice that federal regulators might pursue their own legal action to recoup the nearly $800 million loss Georgian’s failure caused to the Deposit Insurance Fund.

In some ways, Teel’s story is similar to that of executives and directors of the 40 Georgia banks that have failed in the past two years. Many had their nest eggs wiped out. Others could face litigation. At least three failed bank CEOs have filed for personal bankruptcy.

In other ways, Teel was special.

The bombastic and clever banker profited handsomely when he sold his first bank, Bank of North Georgia, to Synovus Financial in 1998. With the wealth that came from the sale, Teel's lifestyle and investments also appeared to be more lavish than that of the average community bank CEO.

“I know a lot of community bank CEOs and none of them have a quail hunting plantation,” said Tony Plath, a former bank executive and current finance professor at the University of North Carolina at Charlotte.

“Most of these guys drive Tahoes and live in upper-middle-class houses and make $300,000 a year,” Plath said. “This is three standard deviations outside the norm of a typical bank CEO.”

In fairness, few economics or banking gurus saw the real estate bubble that led to the recession. Banks, developers and speculators made money hand over fist while the metro area could count on yearly population growth of more than 50,000 people.

According to documents filed in federal court, Teel, like his bank, bet big on real estate deals once seen as sure things. But the Great Recession claimed the bank and put Teel in a bind.

Teel and his attorney declined requests to be interviewed.

“For over a year now counsel has advised me to respond to all inquiries by saying ‘No comment,'” Teel said in a voicemail message. “Obviously, I must follow counsel’s advice, even if that’s not my typical style or desire.”

During Atlanta’s go-go years, few bankers were as revered as Teel, a larger-than-life executive who in a few years built Georgian into the second biggest bank based in the city.

"There was this perception about Gordon that he had the Midas touch," said Chris Marinac, a bank analyst with FIG Partners in Atlanta. "When you were in a room with Gordon, Gordon had a presence unlike most people. He filled the room."

In 2003, Teel and a group of investors bought Georgian and turned the tiny bank into a $2.2 billion-in-assets real estate lending powerhouse. He courted business from Atlanta’s developer elites and the bank rang up big-time profits off subdivisions and retail centers built for the metro area’s population boom.

The bank also catered to some of Atlanta’s wealthiest families, offered concierge services and, for a time, employed a full-time private chef who had once manned the stove for British royalty. Big name clients were wooed for business at Oakview Plantation, Teel’s private quail hunting lodge outside Albany.

In a report last April examining Georgian’s failure, federal auditors criticized the bank for betting too heavily on speculative real estate development loans, some of the riskiest around.

When housing was hot, profits were, too. But Georgian, like the state’s other failed banks, wagered too much on real estate. When things soured after the collapse of the housing market, Georgian was too slow to react.

A report by the Federal Deposit Insurance Corp.’s inspector general criticized Georgian for relying too much on high-cost deposits as well as for loans over the legal lending limit and lax underwriting and management policies.

Not only did Georgian invest heavily in real estate, it appears Teel did personally as well.

On July 15, Fifth Third Bank of Cincinnati, Ohio, was awarded a default judgment of $5.3 million against Teel and his wife. The judgment was for a default on three loans totaling $4.7 million, plus interest and attorneys’ fees.

With the ruling, the bank could attempt to seize a home on Lake Oconee and a Fulton County residence, as well as other interests that backed the loans.

Fifth Third officials and their attorneys decline to comment for this story.

The judgment does not explicitly say what the loans were for. But exhibits filed with the claim show Teel and his wife were at least minority investors in an apartment complex development group. They held an interest in an LLC that was part of a joint-venture in 3630 Peachtree Road, a mixed-use office-condo skyscraper developed by Post Properties and Novare Group Holdings.

Teel is also the operating partner of Oakview Plantation, the holding company of which filed July 3 for Chapter 11 bankruptcy protection, listing $1 million to $10 million in both assets and debt.

The 1,750-plus-acre plantation features a 6 1/2-acre pond, two guest cottages and a main lodge with a 20-run dog kennel and 10-stall horse stable, according to an online sales listing by Needmore Properties in Albany.