Conyers-based Eastside Commercial Bank was closed Friday by bank regulators, becoming the first Georgia bank to fail in more than a year.
The small bank, which has two branches in Rockdale and Gwinnett counties, had long been on bank regulators’ watch list of troubled banks.
The bank’s deposits and branches were acquired by Atlanta-based Community and Southern Bank, while Macon-based State Bank and Trust Co. bought part of the institution’s loans, said the Federal Deposit Insurance Corp., a federal bank regulator.
Eastside’s two branches in Conyers and Duluth will reopen as Community and Southern Bank branches, said the FDIC. The FDIC also guarantees bank deposits up to $250,000.
The failure occurred even as Georgia’s banking industry shows growing signs of recovery, with rising profits and a lengthening list of recent merger deals among healthy banks.
Georgia Bankers Association President Joe Brannen said 86 percent of the state’s 200-plus banks are profitable and reporting rising deposits and loan volumes.
“Unfortunately, the effects of the severe financial downturn have had a long reach. It’s just further evidence of the severity of the recession and how hard it has been for everyone to recover,” Brannen said of Eastside Commercial Bank’s failure.
Still, “the banking industry and the economy in Georgia are much stronger than just a couple of years ago,” he said.
Founded in 2005, Eastside Commerical Bank was one of the wave of dozens of new banks that were launched in Georgia during the real estate boom, only to struggle for survival after the boom collapsed and real estate developers and other businesses were unable to re-pay loans.
In 2009, state and federal regulators had ordered Eastside Commercial Bank to to shore up its finances, improve management and cease “unsafe or unsound banking practices.”
At the end of March, the bank had $169 million in assets and $161.56 million in deposits, according to the Federal Deposit Insurance Corp.
