Failed Banks: Community Bank of West Georgia and Neighborhood Community Bank, 6/26/2009
Georgia continues to live up to its name as the Failed Bank Capital of the US with two more banking closures today of Community Bank of West Georgia, Villa Rica, GA and Neighborhood Community Bank, Newnan, Georgia. For all of 2009 to date, Georgia now accounts for 20% of all banking failures.
Some of the eye catching aspects of the Community Bank of West Georgia banking closure are:
1. Community Bank depositors had uninsured deposits totaling $1.1 million exposing the account owners to potential losses.
2. The FDIC was not able to locate another banking institution to assume Community Bank, probably due to the horrendous financial condition of Community Bank. As of May 15, 2009, Community Bank had total assets of $199.4 million and the FDIC is estimating the cost of this bank failure to be $85 million or a huge 43% of total assets. The final losses will not be known until final disposition of Community’s assets, but the FDIC loss projections imply that almost half of the bank’s loan portfolio was worthless.
The FDIC will mail checks to insured depositors for their funds on June 29, 2009. As of May 15, 2009, Community Bank had total deposits of $182.5 million. Those unfortunate depositors with balances in excess of FDIC coverage may eventually recover a portion of their deposits, depending on what recovery the FDIC obtains on disposition of Community’s assets. Since the financial condition of a bank can be difficult to ascertain, it is very risky, given the weak financial condition of many banks, to have deposits in excess of FDIC coverage.
Neighborhood Community Bank, Newnan, Georgia
The FDIC, as receiver, entered into an agreement with Charter Bank, West Point, Georgia to assume all of Neighborhood Community Bank assets. As of March 31, 2009 Neighborhood Bank had total assets of $221.6 million and total deposits of $191.3 million. Charter Bank will purchase $209.6 million of Neighborhood’s assets, subject to a loss sharing agreement with the FDIC on $178.5 million of the purchased assets.
The estimated cost to the FDIC Deposit Insurance Fund will be $66.7 million. Neighborhood Community Bank is the 42nd banking failure this year and the ninth in Georgia.