The Federal Deposit Insurance Corp. or FDIC, announced Friday the shuttering of one bank in Georgia, taking the count of total U.S. bank closures in 2013 to four, after 51 in 2012, 92 in 2011 and the 157 bank closures in 2010.
This is the first FDIC-insured institution to fail in Georgia this year, but the state of Georgia was at the top spot for bank failures in 2012 and 2011. Since the start of the financial crisis in 2008, there have been 85 bank failures in Georgia, including this one.
Frontier Bank was closed by the Georgia Department of Banking and Finance on Friday, with the assets of the failed bank being assumed by HeritageBank of the South, a subsidiary of Heritage Financial Group, Inc. (HBOS: Quote), in an FDIC assisted transaction. The FDIC estimates that the cost to the Deposit Insurance Fund or DIF, by the bank closure will be a total of $51.6 million.
“We are excited by the opportunities this acquisition presents to our company, including the overall continued growth of our franchise in Georgia, Alabama and Florida, and more specifically to our growing presence in and around Auburn, Alabama,” said Leonard Dorminey, President and CEO of Heritage Financial.
Albany, Georgia-based HeritageBank acquired the banking operations, including all the deposits, of LaGrange, Georgia-based Frontier Bank, from the FDIC.
As of December 31, 2012, the bank had about $258.8 million in total assets and $224.1 million in total deposits. HeritageBank agreed to purchase essentially all of Frontier Bank’s assets, while assuming all of the deposits of the failed bank. This transaction does not involve a loss-share agreement, but is subject to an asset purchase discount of $34.8 million.
The FDIC noted that all customers of the nine branches of the failed bank can this evening and over the weekend access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed, and loan customers should continue to make their payments as usual.
Customers of failed banks are protected, by the FDIC, which has insured bank deposits since the Great Depression, currently covering customer accounts up to $250,000. The FDIC insures deposits at the nation’s 7,083 banks and savings associations.
On an average, just over 4 banks have failed per month in 2012, with bank closures for 2011 averaging eight per month, and thirteen in 2010.
The 51 bank closures in 2012 were sharply down from 92 in 2011, the peak of 157 in 2010 in the wake of the financial crisis, and 140 in 2009, but were double the 25 bank failures in 2008. Meanwhile, only three banks failed in 2007, and a total of 23 in the six years prior to that. The highest and all time record for bank closures was in 1989 when 534 banks closed, followed by 181 bank failures in 1992.
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by RTT Staff Writer
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