WASHINGTON — Bank regulators waited too long to address problems at a Duluth, Ga.-based bank that failed last year and could cost the federal deposit insurance fund an estimated $207 million, government auditors said Monday.

The Office of Inspector General for the Federal Deposit Insurance Corp. said in a report that the agency's supervision of Haven Trust Bank was "not effective in identifying and addressing problems early enough."

"By the time supervisory actions were taken against the bank, failure was all but inevitable," the IG's office said in the report. Haven Trust failed last December.

Auditors found that problems at Haven Trust were myriad, including a focus on high-risk commercial real estate and construction loans. At the close of 2007, the report said, commercial real estate loans totaled 781% of the bank's tier 1 capital. Despite the high concentration of risky loans, the bank had no internal procedures for monitoring those concentrations and had few limits on lax underwriting.

"Bank management engaged in a number of improper practices, including renewing loans that were experiencing problems and originating loans that appeared to be for the benefit of insiders and related parties," the report said.

The FDIC, the report said, should have been more aggressive in addressing the bank's use of interest reserves, "questionable loan participation practices," and conducted a better analysis of Haven Trust's allowance for loan and lease losses.

The FDIC, in a letter to auditors included in the report, agreed that "earlier enforcement actions and management component rating downgrades could have been used to address the persistent risk management weaknesses."

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