Freedom Bank fails, seventh to close in Georgia
Atlanta Journal-Constitution
Fri March 6, 2009
Another small bank has failed in Georgia: Federal and state regulators on Friday seized Freedom Bank of Georgia in Commerce, the seventh Georgia bank to fail in the past seven months.
Northeast Georgia Bank of Lavonia will take over Freedom Bank's $161 million in deposits and also purchased most of the bank's $173 million in assets. Northeast Georgia bought the assets at an 8 percent discount.
Northeast Georgia and the Federal Deposit Insurance Corp. have agreed to share any losses on $96.5 million of Freedom's assets.
Freedom is the second Georgia bank to fail this year, following FirstBank Financial Services of McDonough, which failed Feb. 6.
The FDIC said the failure will cost its insurance fund $36.2 million.
Freedom, established in 2004, appears to have fallen into the same trap as the state's other failed banks. Its loans were concentrated in the real estate sector, which has collapsed over the past 18 months. At the end of December, the bank reported a $9 million loss for the year and $12.4 million in loans at least 90 days late and deemed uncollectible.
Freedom Bank's four branches will reopen Monday as branches of Northeast Georgia. Customers will be able to access their funds and use their ATM cards over the weekend.
Chip MacDonald, a banking lawyer at Jones Day in Atlanta, said such risk-sharing agreements reduce costs to the FDIC and minimize disruption to the community by leaving the assets in private hands. MacDonald was not involved in the deal.
Georgia bank failures of past year
The list below shows the assets of each bank and the date it failed.
Freedom Bank of Georgia (Commerce); failed Friday; $173 million
FirstBank Financial Services (McDonough); failed Feb. 6, '09; $337 million
Haven Trust Bank (Duluth); failed Dec. 12, '08; $572 million
First Georgia Community Bank (Jackson); failed Dec. 5, '08; $237.5 million
The Community Bank (Loganville); failed Nov. 21, 2008; $681 million
Alpha Bank (Alpharetta): failed Oct. 24, 2008; $354.1 million
Integrity Bank (Alpharetta); failed Aug. 29, '08; $1.1 B
Source: FDIC
Share your thoughts in the Forum
