Douglas County Bank, GA, Biggest Bank Failure of 2013

DCBDouglas County Bank, Douglasville, GA, was closed today by the Georgia Banking Department.  The FDIC, acting as receiver, sold Douglas County Bank to Hamilton State Bank, Hoschton, Georgia, which will assume all deposits of the failed bank.

Regulators have been closing a series of small sized banks this year that were unable to recover financially or raise additional capital.  Douglas County Bank, with $316.5 million in assets becomes the largest bank failure of 2013.  Including Douglas County, the ten failed banks in 2013 had total assets of $1.2 billion and resulted in total losses to the FDIC of $270.1 million.

All four branches of Douglas County Bank will reopen as branches of Hamilton State Bank.  All depositors of the failed bank will automatically become depositors of Hamilton State Bank with uninterrupted FDIC deposit insurance coverage.  Customers of Douglas County can continue to access their money over the weekend through the use of checks, debit cards and ATMs.

At December 31, 2012, Douglas County Bank had total assets of $316.5 million and total deposits of $314.3 million.  Under terms of the purchase agreement with the FDIC, Hamilton State will pay the FDIC a premium of 0.5 percent on the assumed deposits.  In addition, Hamilton State Bank agreed to purchase $260.9 million of the failed bank’s assets with the remainder being retained by the FDIC for later disposition.

As an incentive to Hamilton Bank to acquire Douglas Bank, the FDIC entered into a loss-share agreement with Hamilton Bank that covers $159.2 million of the asset pool acquired.  Both Hamilton Bank and the FDIC will share in the losses on the loan portfolio acquired.  The FDIC maintains that by using loss-share agreements, losses on failed banking assets are ultimately minimized by keeping them in the private sector.

Hamilton State Bank has 21 branches and over $1.37 billion in assets as of December 31, 2012.  The acquisition of Hamilton State Bank is the fourth failed bank to be purchased by Hamilton State Bank since 2011.

The loss to the FDIC deposit insurance fund for the failure of Douglas County Bank is $86.4 million.  Douglas County Bank becomes the 10th bank failure of 2013 and the second banking failure in Georgia.

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