With the closure of a group of six interrelated Georgia banks this past Friday night, the state has now reclaimed the dubious distinction of as having the most failed banks of any state this year. With the addition of the most recent closures, there have now been 16 failed banks in Georgia this year, compared to 12 in Illinois, which had previously and for a brief period (refer here) led Georgia in the number of failed banks.
There were a total of seven bank closures on July 24, 2009, which brings the year to date total number of closures to 64. The pace of bank failures has definitely picked up in the last several weeks. There have been 27 bank closures just in the five-week period since June 19, which is more that the number of banks (25) that failed in all of 2008.
The six Georgia banks that filed Friday were all subsidiaries of Security Bank Corp., which had been Georgia’s fourth-largest lender. The six units were technically six separate banks, although according to the Atlanta Business Chronicle (here), "the banks essentially operated as the same institution."
The Atlanta Journal-Constitution described the rise and fall of the holding company (here) as "a stark symbol of the state’s banks woes." The bank made a "fatal push" into the Atlanta residential market in 2005 and 2006. The bank "tripled in size" between 2005 and 2009. The bank lost $243 million last year, and at the end of the first quarter of 2009 reported $277 in "severely delinquent loans that bank had given up hope of collecting on."
There have now been 22 different states that have had at least one bank failure this year. Beyond Georgia and Illinois, the other states with high numbers of bank failures include California (8) and Florida (3). Generally, the banks that have failed so far this year have been smaller banks; of the 64 banks that have failed so far this year, 55 have had assets under $1 billion. The FDIC’s complete list of all banks that have failed since October 2000 can be found here.
Relatively few of the bank failures involve publicly traded institutions. In its recent mid-year report on securities litigation (here), Cornerstone Research noted that of the 45 banks that had failed through June 30, 2009, only 21 involved publicly traded companies, and only one failed banks had been involved in securities class action lawsuits this year.
My earlier post analyzing the number of failed banks in Georgia can be found here.
Break in the Action: The D&O Diary will be on an intermittent publication schedule for the next few days. The "normal" publication schedule will resume the week of August 10.