High Trust Bank, Stockbridge, Georgia, was closed today by the Georgia Department of Banking and Finance. The FDIC, acting as receiver, sold the $192 million asset failed bank to Ameris Bank of Moultrie, Georgia.
High Trust Bank has consistently been ranked as one of the most unsafe banks in Georgia by various bank rating agencies. High Trust Bank had an astronomical troubled asset ratio of 943% compared to a national median of 15%. Banks with a troubled asset ratio exceeding 100% almost always wind up as failed banks. High Trust Bank agreed to execute a Consent Order with regulators on November 20, 2009. The Bank was unable to comply with regulatory directives and was therefore closed today.
The history of High Trust Bank extends back to 1907. According to the Bank’s website, the Bank was locally owned and managed until 2007. In June 2007, a group of investors from Asia purchased a controlling interest in the Bank who aggressively expanded, focusing on commercial and residential lending. According to the new Chairman, Mike Patel, “Our bank specializes in a quick decision making process. We have the expertise to make decisions on loans in a short span of time…we can make deals happen.”
The new management of High Trust Bank rapidly expanded lending at the exact wrong time. Loan growth was fueled through high rates on deposits and highly competitive rates on loans. Asset growth exploded from about $75 million in 2007 to over $200 million in 2008.
Ameris Bank, owned by holding company Ameris Bancorp, also acquired another failed bank today, One Georgia Bank. Since 2009, Ameris Bank has acquired a total of 8 failed banks from the FDIC despite the fact that Ameris still owes the US Treasury $52 million under the TARP program.
Ameris Bank assumed all deposits of High Trust Bank and also agreed to purchase all assets, subject to a loss-share agreement with the FDIC that provides loss protection on $164.8 million of the asset pool acquired. At March 31, 2011, High Trust had total assets of $192.5 million and total deposits of $189.5 million.
As noted in the post on the failure of One Georgia Bank, Ameris Bank has its own set of problems.
Ameris Bank, which has been aggressively buying failed banking institutions, has its own set of financial problems. Ameris Bank has a very high troubled asset ratio of 92% and is given a low score for overall institutional financial strength by depositaccounts.com which ranks the financial health of banks. Although Ameris Bank is technically well capitalized, it has a large amount of nonperforming and REO assets.
Ameris Bank is one of the few banks that still owe the US Treasury money under the TARP program. Ameris was given $52 million through the TARP Capital Purchase Program in November 2008. Although Ameris has made the interest payments due on the loan, the Bank has not repaid the original loan of $52 million. The question of why regulators would sell a failed bank to a problem bank has been previously raised – see Banks With Unpaid TARP Loans Buy Failed Banks From FDIC. Ameris Bank is owned by its holding company Ameris Bancorp.
The stock of Ameris Bancorp is trading at almost 70% below its price level of 2007. After trading above $25 in 2007, Ameris closed Friday at $9.23.
High Trust Bank is the nation’s 53rd banking failure and the 16th in Georgia which accounts for 30% of all banking failures this year. The loss to the FDIC Deposit Insurance Fund for the failure of High Trust Bank is $66 million.