The Covington News - - Lo­cal news -


“ The FDIC finds a healthy in­sti­tu­tion to take over the as­sets and de­posits of that failed in­sti­tu­tion,” said Wil­liams-Dick­er­son of the role played by the FDIC.

Un­der O. C. G. A. law, the Ge­or­gia Depart­ment of Bank­ing and Fi­nance is au­tho­rized to take pos­ses­sion of any state-char­tered fi­nan­cial in­sti­tu­tion when it be­comes ei­ther in­sol­vent or is op­er­at­ing in an unsafe or un­sound con­di­tion in its busi­ness trans­ac­tions.

Omens of First Ge­or­gia’s fail­ure have been around for a while. In Septem­ber, First Ge­or­gia had a Texas ra­tio of 199 per­cent. The Texas ra­tio is a mea­sure by which the fi­nan­cial health of a bank is judged by look­ing at the ra­tio of bad loans and as­sets to the cap­i­tal and re­serves set aside to cover po­ten­tial losses. A healthy Texas Ra­tio is con­sid­ered to be any level be­low 40 per­cent. To have a ra­tio above 100 per­cent is a cause for se­ri­ous con­cern.

Christopher Marinac, direc­tor of re­search and co­founder of At­lanta-based FIG Part­ners, a bro­ker firm spe­cial­iz­ing in bank and thrift stocks, said there were two main prob­lems lead­ing to the fail­ure of First Ge­or­gia: a con­cen­tra­tion in real es­tate loans and a lack of ad­e­quate liq­uid­ity.

“At the end of the day it was the con­cen­tra­tion of real es­tate loans that hurt them, in par­tic­u­lar in the res­i­den­tial area,” Marinac said. “ It’s a fa­mil­iar theme. Un­for­tu­nately, we con­tinue to see more of it. Real es­tate, par­tic­u­larly in res­i­den­tial con­struc­tion, was some­thing that a lot of banks did heav­ily. It’s re­ally come back to hurt banks. They just had too much of a good thing.”

A bank’s liq­uid­ity de­ter­mines how quickly they are able to con­vert as­sets into cash in or­der to meet re­quests for with­drawals from de­pos­i­tors. When liq­uid­ity grows thin, it jeop­ar­dizes the abil­ity of a bank to meet all with­drawal re­quests. When it grows too thin, the FDIC will step in and seize the bank to make sure that de­pos­i­tors are pro­tected.

“ Most banks that are fail­ing face liq­uid­ity is­sues at the end,” Marinac said.

Ed­wards said his bank de­cided to ac­quire First Ge­or­gia be­cause its foot­print fit in with the growth plans of United Bank.

“ This was just a very good op­por­tu­nity to al­low us to grow in mar­kets that we were al­ready in and to ex­pand into mar­kets that we weren’t in,” said Ed­wards.

First Ge­or­gia had branches in Cov­ing­ton, Jack­son, Griffin and Lo­cust Grove. Those are all United Bank lo­ca­tions now. With its ac­qui­si­tion of First Ge­or­gia, United Bank now op­er­ates nine­teen branches in eight con­tigu­ous coun­ties from Thomas­ton to Madison.

United Bank now has more than $ 839 mil­lion in as­sets, $ 68 mil­lion in cap­i­tal and em­ploys nearly 400 people.

Prior to their ac­qui­si­tion of First Ge­or­gia, United Bank had been op­er­at­ing in Cov­ing­ton for a year and a half with a branch on Wash­ing­ton Street. Ed­wards said First Ge­or­gia cus­tomers will ben­e­fit from the change over be­cause they will be able to take ad­van­tage of more branch lo­ca­tions and of United Bank’s later bank- ing hours.

United Bank has cus­tomer con­tact ser­vices from 7 a. m. un­til 11 p. m., six days a week.

“ If any cus­tomers are con­cerned about their ac­counts in any way, please come see us,” Ed­wards said.

Even in this eco­nomic down­turn, Ed­wards said he feels con­fi­dent about the ac­qui­si­tion of First Ge­or­gia and the long-term health of United Bank.

“ We have a very di­ver­si­fied loan port­fo­lio with a mix­ture of con­sumer, commercial and real es­tate lend­ing. We’ve been a con­ser­va­tive bank and that’s al­lowed us to stay in busi­ness for over 100 years,” Ed­wards said.

United Bank is 90 per­cent owned by its directors, em­ploy­ees and their fam­i­lies. More than 20 per­cent of the bank is owned by em­ploy­ees through a profit-shar­ing plan.

The FDIC es­ti­mates that the cost to the De­posit In­sur­ance Fund will be $ 72.2 mil­lion. United Bank’s ac­qui­si­tion of all de­posits was the “ least costly” res­o­lu­tion for the FDIC’s De­posit In­sur­ance Fund com­pared to al­ter­na­tives.

First Ge­or­gia Community Bank is the 23rd bank to fail in the na­tion this year and the fourth to fail in Ge­or­gia.

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