January 21, 2011 – Enterprise Banking Company, McDonough, GA was closed today by the Georgia Department of Banking and Finance which named the FDIC as receiver. The FDIC was unable to find a buyer for Enterprise Banking. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of McDonough (DINB) to take over the operations of Enterprise Banking.
When a bank fails and the FDIC cannot find a buyer for the failed bank, under the FDI Act, the FDIC creates a DINB to allow customers access to insured funds, time to find another institution to do business with and uninterrupted direct deposits and automated payments.
Depositors of Enterprise Banking have until only January 28, 2011, to close all accounts. If depositors do not close or transfer accounts on or before January 28, the FDIC will mail a check for insured deposits to the address of record.
Uninsured deposits were not transferred to the DINB and depositors with funds in excess of the FDIC insurance limit potentially face the loss of all uninsured deposits. At the time of closing the FDIC did not provide an estimate of the losses on uninsured deposits. Customers with accounts over $250,000 should contact the FDIC at 1-800-405-8251 to discuss their deposits. Beginning Monday uninsured depositors can also access the FDIC web page “Is My Account Fully Insured” at http://www.fdic.gov/bank/individual/failed/enterprise.html.
At September 30, 2010, Enterprise Banking had total assets of $100.9 million and total deposits of $95.5 million. The FDIC will retain all assets of Enterprise and add them to the growing mountain of poor quality failed bank loans held by the FDIC.
At September 30, 2010, the FDIC held a total of $49.7 billion in failed banking assets, classified as “resolution receivables”. The previous high in resolution receivables over the past 20 years was in 1991 when the FDIC held $18.7 billion in failed banking assets. (See FDIC’s Mountain Of Failed Bank Assets Grow).
Enterprise Bank was a locally owned state chartered bank founded in 1925. According to the Bank’s website:
We are a locally owned state chartered community bank with offices in Henry County and Wilcox County. We are proud of our heritage as Enterprise Banking Company was founded on October 25, 1925 in Abbeville, Georgia and named Dorsey State Bank. In March 2005 a group of Henry County businessmen purchased controlling interest and renamed the bank Enterprise Banking Company. The operating headquarters have been subsequently relocated to McDonough, Georgia.
As the name implies Enterprise caters to the financial needs of local entrepreneurs as well as consumers. We service all our customers professionally and confidentially. Our mission is to grow our Bank by building and strengthening customer relationships. We hope to meet and exceed your expectations. We are not just another community bank
Enterprise Banking was over concentrated in commercial real estate and construction loans of very poor asset quality, had a high level of nonperforming loans and totally inadequate reserve provisions for nonperforming loans. Enterprise was carrying assets on the balance sheet at values far in excess of fair market value as indicating by the FDIC’s huge 40% markdown on the loan portfolio when estimating closing losses.
The Bank experienced a loss of $4 million in the September 2010 quarter and was dramatically below regulatory capital requirements. Enterprise had an off the charts troubled asset ratio of 857% – most failed banks have troubled asset ratios of 100% or greater. By allowing Enterprise to remain open despite its desperate financial condition, regulators have not enhanced confidence in the banking system. Enterprise Banking was the subject of a Cease and Desist Order issued December 2009.
The FDIC estimates the loss on Enterprise to the Deposit Insurance Fund at $39.6 million. Enterprise is the fourth banking failure of the year and the second in Georgia.