After almost a three month hiatus of bank failures, regulators closed The Bank of Georgia, Peachtree City, Georgia. Fulfilling one of its primary roles as guarantor of depositor funds, the FDIC sold the failed bank to Fidelity Bank, Atlanta, GA, which will assume all of the deposits of The Bank of Georgia.
Established in February 2000 by a group of local businessmen The Bank of Georgia had well over a quarter billion dollars of assets at the time of its closing. The bank offered a full line of banking services and had seven branches, all of them located within Georgia.
As of June 30, 2015, The Bank of Georgia had year to date losses of over $5 million and with its capital virtually depleted regulators had little choice but to close the bank in order to protect depositors.
All seven branches of The Bank of Georgia will reopen as branches of Fidelity Bank and depositors of The Bank of Georgia will automatically become depositors of Fidelity Bank with continued FDIC deposit insurance coverage up to the applicable limits. Over the weekend depositors of The Bank of Georgia will have full access to their money through the use of checks or by using ATM and debit cards.
At June 30, 2015, The Bank of Georgia has total assets of $294.2 million and total deposits of $280.7 million. Under the purchase and assumption agreement between the FDIC and Fidelity Bank, the FDIC will receive a premium of 3.05 percent from Fidelity Bank on the assumed deposits. In addition, Fidelity Bank agreed to purchase $255.3 million or about 87 percent of the failed bank’s assets. The remaining assets of approximately $39 million will be retained by the FDIC for later disposition.
All shares of The Bank of Georgia were owned by the bank’s holding company, Georgia Bancshares, Inc, Peachtree City, Ga. Stockholders, last in line for priority of claims against the failed bank, stand to lose their entire investment in Georgia Bancshares. Shares of Georgia Bancshares (GABA) closed Friday at 15 cents on very low volume.
The FDIC suffered some pain along with shareholders on the failure of The Bank of Georgia with losses estimated at $23.2 million. According to the FDIC the most cost effective method of dealing with a failed bank is to sell it to a healthy bank which can effectively manage the acquired loan assets. The Bank of Georgia becomes the seventh banking failure of the year and the second in Georgia. The first banking failure of the year in Georgia occurred on February 13, 2015 when regulators closed Capitol City Bank and Trust Company, Atlanta, GA.