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Georgia bank failures continue to mount

By Guest BloggerDecember 7, 2009
By Jake Bernstein, ProPublica

After a brief holiday respite, bank failure Friday came back with a vengeance. The FDIC and its fellow regulators closed six institutions, bringing the total to 130 for the year. (See our complete list of failed banks this year.) 

By far, the largest institution to go down was Cleveland-based savings and loan AmTrust. It's the fourth-largest bank or thrift to fail this year. As of late October, AmTrust had total deposits of approximately $8 billion. Its demise is expected to cost the FDIC's deposit fund about $2 billion.

In a geographic departure, New York Community Bank of Westbury, New York entered into an agreement with the FDIC to assume all of AmTrust's deposits and its 66 branches. Until now, New York Community only had branches in New York and New Jersey. 

The Wall Street Journal has a detailed account of AmTrust's slow demise, including how politicians in Cleveland and Washington interceded with regulators to give the thrift more time, thereby likely increasing the ultimate cost to the FDIC.

Also failing on Friday were three banks in Georgia. The Peach State now leads the country in bank failures, with 24 this year. Among the failures was Buckhead Community Bank, located in a tony suburb of Atlanta. The Atlanta Journal-Constitution describes the bank as "founded by Atlanta business royalty to cater to a wealthy clientele." It had total deposits of approximately $838 million. The failure will cost the FDIC's deposit fund an estimated $241 million.

The big winner in Georgia Friday was Macon-based State Bank & Trust, which gobbled up the remains of Buckhead Community Bank. As the Journal-Constitution reports:

Until recently State Bank was one of the state's smallest lenders. But last summer, the bank was acquired by an investment team led by veteran Georgia banker Joe Evans, who raised nearly $300 million to take over Security Bank of Macon, which failed in July.

While gaining the deposits of Buckhead Community Bank, State Bank also agreed to take on Buckhead's failed assets, which includes failing loans.

State Bank & Trust also picked up First Security National Bank of Norcross, Georgia, which the Office of the Comptroller of the Currency closed Friday. As of late September, First Security had approximately $123 million in deposits. State Bank bought the deposits and will also cover approximately $118 million of the failed assets. The last bank to fail in Georgia Friday was Tattnall Bank of Reidsville. HeritageBank of the South assumed its deposits. The days carnage in Georgia alone cost the FDIC's deposit fund about $285 million.

The Greater Atlantic Bank of Reston, Virginia and Benchmark Bank of Aurora, Illinois rounded off the day's failures. This is the first bank failure in Virginia since 1993. Greater Atlantic's deposits were taken by Sonabank of McLean Virginia. Benchmark Bank is the 20th bank to fail in Illinois this year. Only Georgia has had more failures. Benchmark Bank's deposits were assumed by MB Financial Bank of Chicago. The two failures are expected to cost the FDIC's deposit fund $99 million.

Add it all up, and Friday's bloodbath will cost the FDIC's deposit fund an estimated $2.38 billion.