Hometown Community Bank, established at the peak of the real estate lending mania in 2005, was closed today by the Georgia Department of Banking and Finance. The FDIC, acting as receiver, protected depositors by selling the failed bank to CertusBank, National Association, Easley, South Carolina, which will assume all deposits of Hometown Community Bank.
According to the failed bank’s website, Hometown Community Bank, Braselton, GA, was “a locally owned community bank established in August 2005 by a group of local business owners and entrepreneurs to serve the financial needs of Jackson, Barrow, Gwinnett and Hall counties.” The Bank’s mission to pursue “growth opportunities” in lending proved disastrous, as loans were aggressively approved as real estate values began the greatest collapse since the Great Depression.
The failure of Hometown Community Bank became a question of when, not if, as the level of nonperforming loans soared. At June 30, 2012, the Bank had a troubled asset ratio of 430% compared to a national average of 12%. Once the troubled asset ratio exceeds 100%, the failure of a bank becomes almost inevitable. The Bank has had a troubled asset ratio in excess of 200% since mid 2009, raising the obvious question of why regulators allowed Hometown Community Bank to remain in operation long after their ultimate failure had become certain (see Regulators Allow Zombie Banks to Remain Open).
Hometown Community’s two branches will reopen on Saturday as branches of CertusBank. All depositors of Hometown will automatically become depositors of CertusBank with uninterrupted deposit insurance coverage by the FDIC up to the applicable limits. Over the weekend, depositors of the failed bank will have full access to their money through the use of checking accounts, debit cards and ATMs.
At September 30, 2012, Hometown Community Bank had total deposits of $108.9 million and total assets of $124.6 million. CertusBank agreed to purchase all of the assets of Hometown in addition to assuming all of the failed bank’s deposits.
CertusBank is a subsidiary of Blue Ridge Holdings, a Charlotte based investment group. With the acquisition of Hometown Community, Certus Bank has now acquired a total of four failed banks.
Blue Ridge Holdings was founded by a group of banking executives who formerly worked for Bank of America and Wachovia. CertusBank made its first failed bank acquisition in January of 2011 when it acquired Community South Bank & Trust, Easley, S.C. In May 2011, CertusBank acquired an additional two failed banks, Atlantic Southern Bank of Macon, Georgia, and First Georgia Banking Company of Franklin, Georgia. Including the latest failed bank acquisition, CertusBank now has over $2 billion in assets.
The cost to the FDIC Deposit Insurance Fund (DIF) for the failure of Hometown Community Bank is $36.7 million. Hometown Community becomes the nation’s 50th banking failure of 2012 and the 10th in Georgia.