WASHINGTON In one fell swoop, regulators seized a $2.8 billion-asset Georgia banking company and its six subsidiaries and sold them off to another bank in the state.
The complicated transaction was the end for Security Bank Corp. in Macon, which will now be owned by State Bank and Trust Co., a $35 million-asset institution in Pinehurst.
The six failures, along with one earlier in the evening in New York State, brought the years total to 64. Since June 26, the Federal Deposit Insurance Corp. has handled 24 failures, averaging almost five a week.
Under the deal, State Bank and Trust raised $300 million in capital from a team of 26 institutional investors, which was used to assume virtually all of Securitys holdings. The investment team is led by Joseph Evans, the former chief executive at $1.8 billion-asset Flag Financial Corp. in Atlanta.
The acquirer took over all of Securitys $2.4 billion in deposits, as well $2.4 billion of its assets, and agreed to share losses with the FDIC on a pool of $1.7 billion in assets. All 20 branches will reopen under normal hours as part of State Bank and Trust.
The largest failure was that of $1.2 billion-asset Security Bank of Bibb County, in Macon. The takeover also included the closures of Security Bank of North Fulton in Alpharetta ($209 million in assets), Security Bank of North Metro in Woodstock ($224 million), Security Bank of Gwinnett County in Suwanee ($322 million), Security Bank of Houston County in Perry ($383 million), and Security Bank of Jones County in Gray ($453 million).
Securitys problems heightened at the beginning of last year with the company suffering under the weight of bad real estate loans. After losing $24 million in the first quarter of 2008, it announced it had received a $40 million infusion from FSI Group LLC, a Cincinnati private-equity firm.
Despite that investment, the problems continued. In a March 2009 securities filing, Security said its auditor had raised serious doubts about its future. The company was subject to a written agreement in May of this year with the Georgia state regulator and the Federal Reserve Board, which required it to develop better risk management and capital plans, among other measures.
In April, the FDIC issued cease-and-desist orders against several of the subsidiaries, including the Macon bank, citing inadequate management, poor-quality loans, and "hazardous lending and lax collection policies."
With the failures, 16 institutions have now gone down in the Peach State in 2009, representing a quarter of the years closures. The FDIC said the entire resolution of the company is estimated to cost $807 million.
Earlier in the evening, regulators closed $61 million-asset Waterford Village Bank in Clarence, N.Y.
The FDIC said Evans Bank in Angola, N.Y., would assume all $58 million of Waterford Villages deposits, and purchase roughly all of its assets. The acquirer and the FDIC will share in losses on $56 of those assets. The failure is estimated to cost $5.6 million, the FDIC said.