Crescent Bank & Trust, a $1 billion Jasper bank, put too many eggs in the real estate basket and failed last July because it couldn’t cope when the market collapsed.
Its failure, in fact, is projected to cost the insurance fund that protects depositors nearly $40 million more (16 percent) than the $240 million originally estimated, according to a report released this week by the Federal Deposit Insurance Corp. inspector general.
The causes of Crescent’s collapse are all too familiar in Georgia, the nation’s leader with 53 bank failures since mid-2008.
The regulator’s post-mortem report criticized the bank’s management and board for their oversight of its finances, poor lending policies and a portfolio too heavy on loans for speculative developments.
Crescent, founded in 1989, pursued a slow-growth strategy until it sold off a mortgage business and bought a Fulton County community bank in 2005. Crescent then set off on a high-growth trajectory fueled by development loans and so-called brokered deposits, ones obtained by brokers who shop nationwide for good interest rates.
By the end of 2007, construction and land acquisition loans made up half of its $815 million portfolio. The bank doubled in asset size to $1 billion from December 2004 to December 2008.
Real estate losses appeared in mid-2007, and the bank’s portfolio worsened throughout 2008 and 2009. The bank lost $83 million over its last 30 months in business.
In May 2009, regulators issued a cease and desist order, instructing the bank to improve its operations and raise investor cash.
Crescent had 11 branches across the northern metro area. The bank was acquired by Renasant Bank of Tupelo, Miss., and its branches renamed.
The inspector general’s report also criticized regulators, saying state and federal industry watchdogs could have "placed greater emphasis on Crescent’s risk management practices” and recommended the bank reduce its exposure to development loans or hold more cash in reserve.
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