Chestatee State Bank, Dawsonville, GA, Shut Down By Regulators

December 17, 2010 – Chestatee State Bank, Dawsonville, Georgia, was closed today by the Georgia Department of Banking and Finance, which appointed the FDIC as receiver.  Chestatee, a four branch bank, was sold by the FDIC to Bank of the Ozarks, Little Rock, Arkansas, which previously acquired three other failed banks this year in FDIC assisted transactions.

Depositors of Chestatee will have full access to their funds over the weekend with uninterrupted FDIC deposit insurance coverage.   All branches of Chestatee will reopen on Monday as branches of Bank of the Ozarks.

Chestatee Bank’s rudimentary website cited itself for providing the “personal touch” in banking and also provided an explanation for the origin of its name.

“The personal touch is the cornerstone of our charter and our experienced staff is committed to assisting you with your business needs. One key element of personal service is listening to our customers.

I hope you have found the bank to do business with for many years to come.”

Ches-ta-tee: is a Cherokee word that means “Pine Torch Place” or “Place of the Lights.” It was so called because the Indians would light torches from bonfires along the banks of the Chestatee River, and use them to hunt deer and other game at night in the forest bordering the river. The Chestatee River, which is an upper tributary of the Chattahoochee River, rises in Lumpkin County and now forms the Chestatee Bay of Lake Lanier as it enters Dawson County. The Cherokee called this area ATSUNSTA TI YI.

In August 2008, the FDIC issued a cease and desist order against Chestatee citing the Bank for “unsafe and unsound banking practices” and “violations of the law”.   Specifically, the FDIC cited the large amount of poor quality loans, inadequate capital, inadequate loan loss reserves, poor underwriting practices and controls, and an over concentration of lending in high risk construction and non-owner occupied loans.  Chestatee had an astounding  troubled asset ratio of 453% and should have been closed long before today in the interest of protecting depositor funds.

At September 30, 2010, Chestatee had total assets of $244.4 million and total deposits of $240.5 million.  Bank of the Ozarks assumed all deposits and purchased all assets of failed Chestatee.  The asset purchase by Bank of the Ozarks is protected from loss through a loss-share transaction entered into with the FDIC covering $195.3 million or 80% of Chestatee’s assets.

Bank of the Ozarks had received $75 million under the Troubled Asset Relief Program but fully paid back the Treasury in November 2009.  Bank of the Ozarks, based in Little Rock, Arkansas, is well capitalized and has over $3.2 billion in assets. The Bank expects the acquisition of Chestatee to be accretive to income and book value.

In a press release, Bank of the Ozarks Chairman and CEO George Gleason, said “We are proud of our 107-year tradition of strong and prudent banking practices, and we are ready to deliver the best in friendly, hometown service supported by state-of-the-art technology to our new customers.  Our new customers can rest assured that their deposits are safe and accessible.”

This is the fourth failed bank acquisition by Bank of the Ozarks this year.  The three previously completed failed bank acquisitions were Unity National Bank of Georgia in March, Woodlands Bank of South Carolina in July and Horizon Bank of Florida in September.

The Bank of the Ozarks stock price and earnings have recovered significantly since the lows of 2008.


The failure of Chestatee Bank is expected to cost the FDIC Deposit Insurance Fund $75.3 million or 31% of total assets.  Chestatee is the 153rd banking failure this year and the 19 in Georgia, which has the second highest number of banking failures in the nation after Florida.

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