July 30, 2010 – Northwest Bank and Trust, Acworth, Georgia, was closed today by the Georgia Department of Banking and Finance. The FDIC was appointed as receiver and entered into a purchase and assumption agreement with State Bank and Trust Company, Macon, Georgia, to take over failed Northwest Bank. State Bank will assume all deposits and essentially all of the assets of failed Northwest Bank.
Northwest Bank was founded in 2004 as the real estate bubble was peaking. As prices collapsed the bank was overwhelmed with nonperforming loans and was unable to raise additional capital. Northwest was the subject of an FDIC consent order dated February 2010, under which management agreed to undertake certain operational and financial actions to address the bank’s unsound financial condition.
Based on the latest financial information, Northwest Bank had a very high troubled asset ratio of 304 compared to the national median of 15. The vast majority of failed banks have troubled asset ratios of 100% or greater. Unable to raise additional capital, regulators had no choice but to close down troubled Northwest Bank.
Northwest had two branches and operated as a subsidiary of Northwest Bancshares, Inc., Acworth, GA. The two branches of Northwest will reopen on Saturday as part of State Bank and there will be no disruption to customer banking.
Northwest Bank had $167.7 million in assets and $159.4 million in deposits.
State Bank and the FDIC entered into a loss-share agreement covering $107.6 million of failed Northwest’s assets. The FDIC and State Bank will share in the losses on the covered asset pools. The loss-share agreement, according to the FDIC, maximizes returns by keeping assets in the private sector and minimizing disruption to borrowers.
The failure of Northwest Bank was the eleventh banking failure in Georgia this year and Georgia is now second only to Florida in the number of bank failures. The cost to the FDIC Deposit Insurance Fund for closing Northwest is estimated at $39.8 million. Northwest is the nation’s 104th banking failure this year.