Atlanta Business Chronicle - by J. Scott Trubey Staff Writer

The calm appears to be ending before what could be a new storm of bank failures.

Bank failures are expected to pick up again in Georgia as regulators turn their attention to several Peach State lenders that could be sacked and sold to new owners over the March 19-21 and March 26-28 weekends.

The anticipated closures would end a seven-week lull and mark a renewed effort by regulators to dispose of crippled Georgia banks.

At least five struggling North Georgia banks are said to be up for bids through the Federal Deposit Insurance Corp., and regulators are expected to sell the ailing lenders to rivals in bundles on March 19 and March 26, multiple banking sources have told Atlanta Business Chronicle.

The anticipated seizure of at least five banks through the end of the month is expected to bring new buyers into Georgia as stronger players see attractive opportunities to enter the state.

“I have heard from parties within [the resolutions division of the FDIC] that they are beginning to look more and more at the bundling of banks to address in a rapid manner the large number of small failures to come,” said Brennan Ryan, banking attorney and partner with Nelson Mullins Riley & Scarborough LLP in Atlanta.

So far this year, only two Georgia banks have failed after the state led the nation in shuttered banks in 2009. More than a third of Georgia’s 305 banks are under some form of regulatory oversight, and dozens fall below regulatory standards for being well-capitalized.

Regulators stretched thin by growing concerns nationwide have been putting out fires in other states and have largely bypassed Georgia so far this year, industry insiders say. “The beat goes on and there’s more work to be done,” said Chris Marinac, bank analyst with FIG Partners LLC in Atlanta.

To be well-capitalized under federal regulatory standards, banks must have at least 10 percent total risk-based capital. Fifty-eight Georgia banks, including 32 in metro Atlanta, have fallen below that key regulatory measure. There were 42 banks below 10 percent total risk-based capital at the end of the third quarter.

Twenty-three banks have less than 8 percent total risk-based capital, the threshold for adequate capital, with seven banks below 6 percent, considered under-capitalized. Five of those seven were in metro Atlanta.

Among the largest of Georgia’s most critically injured community lenders is Appalachian Community Bank in Ellijay. The $1 billion-in-assets lender has seen its total risk-based capital fall to 3.82 percent and its problem loans far exceed its capital cushion.

Another measure of financial health, Texas ratios, are also climbing for many struggling banks.

Appalachian Community had a ratio of 561 percent, the third-highest in the state, at the end of the fourth quarter.

The figure — named for the Texas savings and loans where it was used to gauge financial health during the Savings & Loan Crisis — compares total loan problems to a bank’s total equity capital. A figure approaching 100 percent indicates problems are exceeding the bank’s available capital, and outstripping its ability to absorb losses.

Among the other lenders with the highest Texas ratios are McIntosh Commercial Bank of Carrollton (885 percent) and Century Security Bank of Johns Creek (741 percent).

There is much speculation that some deals to come in Georgia might involve the bundling of a relatively desirable bank with another bank that is either in an undesirable location geographically or that has so little franchise value it is unlikely to be acquired alone in an FDIC-assisted transaction.

Some within the industry are privately saying there might not be bidders for some of Georgia’s troubled banks because they have little true value — either because of loan portfolios littered with rotten development loans and a lack of real deposits, or because they are located in markets with poor growth prospects.

The failed-bank version of a two-for-one auction is known as a “linked bid.”

The FDIC appears to be focusing its attention each week on specific problem areas, pooling manpower for efficiency rather than selling seized banks in a “one-off” manner, sources say.

Using “linked bids” improves the regulator’s efficiency at disposing of failed banks, sources say. Bundling lenders together to more quickly dispose of some struggling Georgia banks puts less pressure on the resources of regulators and eliminates multiple troubled banks at once.

Georgia has already seen the FDIC sell unrelated banks in this fashion. State Bank & Trust acquired metro Atlanta lenders The Buckhead Community Bank and First Security National Bank in December in a bundle.

Private equity-backed State Bank also acquired the six bank subsidiaries of the failed Security Bank Corp. of Macon last July.

“It brings new bidders to the table and makes it easier to resolve these things,” said Ryan, the banking attorney.

Interest in certain crippled banks is expected to be high. What isn’t clear is: Who are the buyers?

Several out-of-state banks are said to be interested in entering the Georgia market or expanding their presence here. It is not clear if any in-state players also are kicking the tires.

Among the out-of-state banks said to be interested in building in Georgia are: First Citizens Bank & Trust Co. of South Carolina, the acquirer of the failed Georgian Bank; IBERIABANK of Louisiana and BB&T Corp.

Another interested suitor could be Community & Southern Bank, the private equity-backed acquirer of the failed First National Bank of Georgia. Community & Southern is headed by Pat Frawley, a former regulator and noted turnaround specialist who is estimated to have more than $150 million in additional capital in his war chest.

By Kris Hudson  And Lingling Wei- Wall Street Journal

Casa Madrona Hotel Spa in Sausalito, Calif. is at the center of an FDIC investigation of Integrity Bank.  The quaint, 63-room hotel overlooking a bay north of San Francisco now is at the center of a messy postmortem involving a small Georgia bank that was seized by banking regulators in August 2008 after lending all its capital to the hotel's owner. The failure cost the U.S. deposit-insurance fund $295 million, and the hotel filed for bankruptcy protection before being sold by the Federal Deposit Insurance Corp. at a foreclosure auction last month.