Banking failure hit the State of Georgia today with the failure of The Park Avenue Bank of Valdosta, Georgia. According to the FDIC, the failed bank will be sold to Bank of the Ozarks which has previously purchased five other failed banks.
Bank of the Ozarks, Little Rock, Arkansas, acquired the banking operations, including all the deposits, of two Georgia-based banks. To protect depositors, the Federal Deposit Insurance Corporation (FDIC) entered into purchase and assumption agreements with Bank of the Ozarks.
First Choice Community Bank, Dallas, Georgia, and The Park Avenue Bank, Valdosta, Georgia, were closed today by the Georgia Department of Banking and Finance, which appointed the FDIC as receiver.
As of December 31, 2010, First Choice Community Bank had total assets of $308.5 million and total deposits of $310.0 million; and The Park Avenue Bank had total assets of $953.3 million and total deposits of $827.7 million. Besides assuming all the deposits from the two Georgia banks, Bank of the Ozarks will purchase essentially all of their assets.
The FDIC and Bank of the Ozarks entered into loss-share transactions on the failed banks’ assets. The loss-share transaction for First Choice Community Bank was $260.7 million; and the loss-share transaction for The Park Avenue Bank was $514.1 million. Bank of the Ozarks will share in the losses on the asset pools covered under the loss-share agreements. The loss-share transactions are projected to maximize returns on the assets covered by keeping them in the private sector.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) for First Choice Community Bank will be $92.4 million; and for The Park Avenue Bank, $306.1 million. Bank of the Ozarks’ acquisition of all the deposits of the two institutions was the “least costly” option for the DIF compared to all alternatives.
The closings are the 37th and 38th FDIC-insured institutions to fail in the nation so far this year and the ninth and tenth in Georgia. Prior to today, the last bank closed in the state was New Horizons Bank, East Ellijay, on April 15, 2011.