The beleaguered banking industry continues to struggle in Georgia, but there may be signs of some stability.
In the Jackson-Barrow County area, three community banks landed on a recently published list of troubled Georgia banks with high “Texas ratios” above 100 percent. But a fourth local struggling bank fell off that list from a year ago, a sign that perhaps stability may be taking hold in the industry.
Much of the change — and potential future change — is due to the injection of new capital at several local banks.
Although Hometown Community Bank of Braselton continued to be on the state’s troubled bank list with a Texas ratio of 224 percent in March, up from 144 percent a year ago, the injection of new capital has slowed the bank’s slide.
Banking industry continues to struggle, but stability may be taking hold
While high, the bank’s Texas ratio was down from the fourth quarter of 2009 when it hit 263 percent.
While the bank’s assets and deposits both saw growth between March of 2009 and March 2010, its troubled assets grew from $14 million last year to $20 million in March 2010. Like many other banks in the area, it also had a loss in the first quarter of $397,000.
“We feel as though 2nd quarter 2010 will reflect improvement in nonperforming loan totals and we have seen some slight improvement in activity related to the residential real estate sector,” said Sean Childers, president of Hometown Community Bank. “We also feel our Texas ratio number will drop again during 2nd quarter 2010.”
Childers said much of that is due to new capital.
“Due to the support of our community and shareholders our board was able to facilitate a capital injection of over $3 million with an additional injection of approximately $1 million during the 2nd and 3rd quarters of 2010,” he said.
“Based on these capital injections, Hometown Community Bank will have the strongest capital position it has had since the economic crisis began. The bank has also maintained near a 30% liquidity ratio the past several months adding further stability to our institution.”
OTHER AREA BANKS
Another area bank that injected new capital in 2009 was First Commerce Bank, also known as First Covenant Bank, in Commerce. That bank saw its Texas ratio fall from 110 in March 2009 to 95 in March of this year, a hopeful trend.
While First Commerce had a loss of $590,000 in the first quarter, its troubled asset portfolio fell from $18.3 million in March 2009 to $15.1 million in March 2010.
A third area bank is also struggling with a high Texas ratio. First Georgia Banking Company had a ratio of 138 in the first quarter of 2010, up from 54 a year ago. While the bank saw growth in both assets and deposits, it lost $1 million in the first quarter and saw its troubled assets climb from $39.5 million in March 2009 to $64.6 million in March 2010. Although based in Northwest Georgia, the bank has branches in Jackson and Banks counties and other Northeast Georgia locations.
PEOPLES BANK STOCK OFFERING
At Winder’s The Peoples Bank, leaders are preparing a major stock offering to shore up the banks finances, according to CEO Chris Maddox.
“We are in the process of trying to get started to do a capital raise, a stock offering, which means we'll be looking for investors to help us get through this really hard time,” he said. Maddox said there are no plans to sell the bank, but that following the stock offering, his family’s long-time ownership of the bank could be diluted.
"We have a majority (of stock), but there are many others,” he said. “So we may not have a majority, but we will still be shareholders and we will be investing in the bank. We are going out to have new shareholders. We will have a stock offering and have existing and new shareholders."
This is the first time in the bank’s 84-year history that it has sought new stockowners.
"We never needed to in 84 years,” Maddox said of the offering. “Eighty-four years ago, everybody raised capital and started the bank. Since then, there hasn't been a stock offering."
The problems at Peoples Bank connect back to a sour real estate market in Northeast Georgia. The bank remained on the high Texas ratio list in March at 232 percent, up from 64 percent a year ago. With 44 percent of the local market, Maddox said the bank had been hit particularly hard by Barrow’s economic downturn.
"We didn't make loans outside our community in all these other places,” Maddox said. “We made loans in our community, and many of them went bad because of our market. That's important, and that's who we are."
While the bank has set aside nearly twice as much funds this year for loan losses than a year ago, it also saw its troubled assets climb to $55 million from $26.7 million in March 2009. The bank had a first quarter loss of $1.7 million, three times its loss in the first quarter of 2009.
Three area banks have failed since the recession began, the largest being Community Bank & Trust, which failed earlier this year. Last year, Freedom Bank based in Commerce and First Piedmont Bank based in Winder failed. All three banks were taken over by other institutions.
Other banks have left the market or curtailed operations in the area in the wake of the housing bust and others have heavy foreclosure properties they are dealing with. Newer banks, however, appear to have missed much of the downturn and remain strong based on March financial reports.
Some 78 banks in the state have ratios above 100 and over 400 banks nationwide have troubled ratios above that level.
While the bank’s assets and deposits both saw growth between March of 2009 and March 2010, its troubled assets grew from $14 million last year to $20 million in March 2010. Like many other banks in the area, it also had a loss in the first quarter of $397,000.
“We feel as though 2nd quarter 2010 will reflect improvement in nonperforming loan totals and we have seen some slight improvement in activity related to the residential real estate sector,” said Sean Childers, president of Hometown Community Bank. “We also feel our Texas ratio number will drop again during 2nd quarter 2010.”
Childers said much of that is due to new capital.
“Due to the support of our community and shareholders our board was able to facilitate a capital injection of over $3 million with an additional injection of approximately $1 million during the 2nd and 3rd quarters of 2010,” he said.
“Based on these capital injections, Hometown Community Bank will have the strongest capital position it has had since the economic crisis began. The bank has also maintained near a 30% liquidity ratio the past several months adding further stability to our institution.”
OTHER AREA BANKS
Another area bank that injected new capital in 2009 was First Commerce Bank, also known as First Covenant Bank, in Commerce. That bank saw its Texas ratio fall from 110 in March 2009 to 95 in March of this year, a hopeful trend.
While First Commerce had a loss of $590,000 in the first quarter, its troubled asset portfolio fell from $18.3 million in March 2009 to $15.1 million in March 2010.
A third area bank is also struggling with a high Texas ratio. First Georgia Banking Company had a ratio of 138 in the first quarter of 2010, up from 54 a year ago. While the bank saw growth in both assets and deposits, it lost $1 million in the first quarter and saw its troubled assets climb from $39.5 million in March 2009 to $64.6 million in March 2010. Although based in Northwest Georgia, the bank has branches in Jackson and Banks counties and other Northeast Georgia locations.
PEOPLES BANK STOCK OFFERING
At Winder’s The Peoples Bank, leaders are preparing a major stock offering to shore up the banks finances, according to CEO Chris Maddox.
“We are in the process of trying to get started to do a capital raise, a stock offering, which means we'll be looking for investors to help us get through this really hard time,” he said. Maddox said there are no plans to sell the bank, but that following the stock offering, his family’s long-time ownership of the bank could be diluted.
"We have a majority (of stock), but there are many others,” he said. “So we may not have a majority, but we will still be shareholders and we will be investing in the bank. We are going out to have new shareholders. We will have a stock offering and have existing and new shareholders."
This is the first time in the bank’s 84-year history that it has sought new stockowners.
"We never needed to in 84 years,” Maddox said of the offering. “Eighty-four years ago, everybody raised capital and started the bank. Since then, there hasn't been a stock offering."
The problems at Peoples Bank connect back to a sour real estate market in Northeast Georgia. The bank remained on the high Texas ratio list in March at 232 percent, up from 64 percent a year ago. With 44 percent of the local market, Maddox said the bank had been hit particularly hard by Barrow’s economic downturn.
"We didn't make loans outside our community in all these other places,” Maddox said. “We made loans in our community, and many of them went bad because of our market. That's important, and that's who we are."
While the bank has set aside nearly twice as much funds this year for loan losses than a year ago, it also saw its troubled assets climb to $55 million from $26.7 million in March 2009. The bank had a first quarter loss of $1.7 million, three times its loss in the first quarter of 2009.
Three area banks have failed since the recession began, the largest being Community Bank & Trust, which failed earlier this year. Last year, Freedom Bank based in Commerce and First Piedmont Bank based in Winder failed. All three banks were taken over by other institutions.
Other banks have left the market or curtailed operations in the area in the wake of the housing bust and others have heavy foreclosure properties they are dealing with. Newer banks, however, appear to have missed much of the downturn and remain strong based on March financial reports.
Some 78 banks in the state have ratios above 100 and over 400 banks nationwide have troubled ratios above that level.
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#1
citizen
on
06/30/10 at 06:54 PM
[Reply]
Chris is not exactly right about what he is saying.... they were involved in a huge deal in Arizona that went back and a marina in Florida. They were involved in participation loans through origination that went back. This was even in the AJC.
#2
What?
on
07/03/10 at 10:18 PM
[Reply]
Thanks for the in-depth explanation of what a Texas ratio is.