December 17, 2010 – Appalachian Community Bank, F.S.B., McCaysville, Georgia, was closed today by The Office of Thrift Supervision, which appointed the FDIC as receiver. The FDIC sold the three branch bank to Peoples Bank of East Tennessee, which will assume all deposits except for brokered deposits and out-of-state certificates of deposit (CD). The FDIC will mail checks on Monday to customers with out of state CDs.
Depositors of Appalachian Bank will have access to their funds over the weekend and continue to have full FDIC insurance coverage. All three branches of Appalachian will reopen as branches of Peoples Bank.
Appalachian Bank’s shares are owned by the holding company, Appalachian Bancshares, Inc., Ellijay, Georgia, whose shares closed on Friday at 1 cent (APAB.PK). Appalachian provided commercial and retail banking services to customers in Georgia, North Carolina and Tennessee.
Appalachian Bank had been issued a cease and desist order by the Office of Thrift Supervision in December 2009 in which numerous deficiencies in the bank’s operating and administrative policies were cited.
At September 30, 2010, Appalachian had total assets of only $68.2 million and total deposits of $76.4 million. Peoples Bank agreed to purchase $67.5 million of the failed bank’s assets and will be protected from loss under a loss-share transaction with the FDIC covering $46.4 million of the purchased assets. The FDIC maintains that loss-share transactions minimize the loss on failed bank’s assets by keeping the assets in the private sector.
Peoples Bank of East Tennessee was established in 1997 and is a $175 million asset locally owned and operated community bank that focuses on serving smaller communities.
The estimated loss on closing Appalachian Bank is $26 million or 38% of total assets. Appalachian is the nation’s 154th bank failure this year and the 20th in Georgia which has the highest number of banking failures in the nation after Florida.