Federal regulators are suing seven former officers and directors of a failed Norcross bank, claiming the insiders disregarded internal loan policies and exposed the bank to risk.
Former officials of First Security National Bank allowed excessive concentrations in risky real estate loans and ignored regulators’ concerns about lending practices, according to a complaint filed Monday in U.S. District Court in Atlanta by the Federal Deposit Insurance Corp.
The FDIC has stepped up its litigation of late, attempting to recoup losses to its insurance fund, which protects depositors at failed institutions.
The regulator has now sued insiders at 12 failed Georgia banks, more than in any other state. Georgia leads the nation in bank failures since mid-2008.
The insiders named are former First Security CEO Dan R. Baker, Senior Lending Officer Ralph N. Barber Jr. and directors Ralph N. Barber Sr., John A. Conway, Jerry G. Gardner, Carl Howington and John R. Smith.
Regulators singled out 17 allegedly deficient loans that resulted in losses of nearly $7.6 million. The suit alleges negligence and gross negligence by the defendants.
“There’s no merit to the complaint or its allegations and we will demonstrate that in court,” said Robert Long, an attorney for the defendants with Alston & Bird.
First Security failed in December 2009, and the suit said its closure resulted in an estimated loss of $43.5 million to the FDIC’s insurance fund.
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