Southern Community Bank, based in Fayetteville, Georgia, was closed by the Georgia Department of Banking and Finance and the FDIC on Friday. Its assets were taken over by United Community Bank. It is the 12th Georgia bank failure in less than a year. Click here for information from the FDIC.
From the Atlanta Business Chronicle:
Last October, Southern Community announced it had overhauled operations and raised capital in an attempt to survive, after receiving a cease and desist order from the FDIC. The bank changed management, replacing founding CEO Gary McGaha with Dave Coxon, and raised $2 million in additional capital from directors, to weather additional loan losses.
The bank reported a 28 percent spike in problem loans during the fourth quarter of 2008 — the worst increase for the bank during the recent economic downturn.
By first quarter 2009, Southern Community reported a 39.4 percent problem loan ratio — a comparison of delinquent loans, and foreclosed real estate to total loans — one of the highest levels in the state.
On March 31, the bank reported $33 million in foreclosed real estate, but only $13 million in capital to absorb further loan losses.
The bank had a Texas ratio of 518 percent. The ratio is a measure of a bank’s nonperforming loans and foreclosed real estate, compared against the tangible common equity and loan loss reserves of the bank...