Georgia was the epicenter of banking failures last year and the trend seems to be continuing in 2012 as regulators close another failed Georgia bank. During 2011 Georgia had 23 bank failures, accounting for 25% of all 92 bank failures that occurred last year. Of the 12 failed banks this year, three have been in Georgia.
The latest Georgia banking failure is Global Commerce Bank, Doraville, GA, which was closed by the Georgia Department of Banking and Finance, which appointed the FDIC as receiver. To protect depositors, the FDIC sold the failed bank to Metro City Bank, Doraville, GA. All deposits of failed Global Commerce will be assumed by Metro City Bank.
Global Commerce had three branches, all of which will reopen Saturday as branches of Metro City. All depositors will continue to be covered by FDIC deposit insurance up to the applicable limits. Over the weekend, depositors of failed Global Commerce will have full access to their money through the use of checking accounts, debit cards and ATMs.
Global Commerce was a commercial bank organized and predominately owned by Asian-Americans. The Bank was founded in 1995 and specialized in commercial loans and lines of credit. As of December 31, 2011, the Bank had total assets of $143.7 million and total deposits of $116.8 million.
As the economy cratered in 2008, Global Commerce encountered significant levels of loan defaults. The Bank had a troubled asset ratio of 393% compared to the national average of 13.7%. Most banks with a troubled asset ratio over 100% usually wind up failing.
Metro City Bank was founded in April 2006. According to the Metro City website, the bank was founded by individuals with a wide range of backgrounds and significant contacts in the local communities. The Bank has total assets of $388 million and was profitable for the past two calendar years, but still owes the U.S. Treasury $7.7 million advanced under the Capital Purchase Program (CPP) of the TARP bailout program.
Metro City Bank has made all payments due under the CPP to the U.S. Treasury, is very well capitalized and is expected to repay the U.S. Treasury investment in full. It has not been unusual for the FDIC to sell failed banks to purchaser banks with outstanding commitments under the CPP (see Banks With Unpaid TARP Loans Buy 18 Failed Banks From FDIC).
Metro City Bank agreed to purchase only $79.0 million of the assets of failed Global Commerce. The balance of the failed bank’s assets of $64.7 million will be retained by the FDIC for later disposition. As of December 31, 2011, the FDIC was holding $28.5 billion of failed bank assets (see The FDIC Has A $30 Billion Junk Loan Problem).
The loss to the FDIC Deposit Insurance Fund is $17.9 million. Global Commerce is the nation’s 12th banking failure of 2012 and the third in Georgia.