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Christopher Menkin
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Christopher "Kit" Menkin is of editor LeasingNews.org (http://www.leasingnews.org/), an internet trade publication for the finance/leasing industry. He has 41 years experience in the finance/leasing industry as well as being a founder of a commercial regional bank and serving on... More
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  • Real Estate Takes Bank Down In Georgia & North Carolina/86th Bank Failure Since 2008 For Georgia 0 comments
    Apr 30, 2013 6:27 PM

    The four branches of Douglas County Bank, Douglasville, Georgia were closed with Hamilton State Bank, Hoschton, Georgia, to assume all of the deposits. Founded June 25, 1974, the bank had 74 full time employees year-end 2012 at their office in Dallas, two offices in Douglasville, and one office in Dallas. The bank had 82 full time employees in 2008.

    Tier 1 risk-based capital ratio 0.51%


    Douglasville bank photo 1993

    Douglas County Bank is the 86th bank failure in the state since mid-2008. That is more than in any other state over that period.

    According to Douglasville patch April 25,2013, unemployment dropped to 10.1%.
    douglasville.patch.com/articles/douglasv...-101

    In this story about Douglasville, story dated July, 2012, "Fully 70 percent of local residents leave the county every day for employment."
    http://www.georgiatrend.com/July-2012/Douglasville-Douglas-County-Coming-Back/

    Unemployment, real estate speculation, and an aggressive loan program brought the bank down.

    "In February 2009, Douglas County Bank president and CEO Billy Mayhew told The Atlanta Journal-Constitution the bank was well-capitalized, but struggling with losses from real estate, as has been the case for many Georgia banks

    "'We just have a lot of real estate loans that have fallen in value, " he said at the time. "But we feel very confident that we will get through this downturn."

    "The bank was founded in 1974 by the Thornton family. Key shareholders included John Thornton, namesake of John Thornton Chevrolet.

    "Lee Bradley, senior managing director of Community Capital Advisors, said the bank was well-respected in the community, but the hole they had fallen into was too deep.

    "'They were a fine bank for a long time,' he said. 'Like everybody else, real estate was the virus that got them.'
    http://www.myajc.com/news/business/douglas-county-bank-felled-by-real-estate-losses/nXY9H/

    Here is the list with photos and descriptions of Douglas County Bank owned 1,026 home Properties:
    http://www.bankownedproperties.org/bankhomes/GEORGIA/DOUGLAS.html

    The real estate "virus" got many banks in Georgia, and you can see in the charge offs it is "construction/land" and home loan write offs, as well as the very high "non-current loans," all related to real estate.

    (in millions, unless otherwise)

    Charge Offs
    2006 $148,000 ( $83,000 1-4 family, $22,000 construction/land, $12,000 individuals, $-1,000 commercial/industrial)
    2007 $243,000 ( $139,000 construction/land, $37,000 commercial/industrial, $35,000 1-4 family, $32,000 other loans)
    2008 $5.1 ($4.3 construction/land, $474,000 1-4 family, $248,000 nonfarm/nonresidential, $70,000 commercial/industrial)
    2009 $10.3 ($9.8 construction/land, $433,000 1-4 family, $75,000 nonfarm/nonresidential, $42,000 other loans, $23,000 commercial Industrial
    2010 $7.3 ( $5.8 construction/land, $917,000 nonfarm/nonres.,$564,000 1-4 family, $45,000 other loans, $5,000 commercial/industrial, $4,000 indiv.)
    2011 $2.0 ($1.6 construction/land, $392,000 1-4 family, $79,000 commercial/industrial, $13,000 other loans)
    2012 $2.5 ( $2.00 construction/land, $289,000 1-4 family, $83,000 commercial/industrial, $48,000 other loans, $38,000 individuals)

    Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans

    (in millions, unless otherwise)

    Non-Current Loans
    2006 $990,000
    2007 $8.9
    2008 $7.8
    2009 $44.9
    2010 $48.5
    2011 $41.3
    2012 $11.2

    Profit
    2006 $11.7
    2007 $9.4
    2008 $71,000
    2009 -$15.0
    2010 -$8.8
    2011 -$6.0
    2012 -$8.8

    Net Equity
    2006 $32.3
    2007 $35.9
    2008 $35.0
    2009 $24.5
    2010 $15.8
    2011 $10.3
    2012 $1.0

    As of December 31, 2012, Douglas County Bank had approximately $316.5 million in total assets and $314.3 million in total deposits. Hamilton State Bank will pay the FDIC a premium of 0.5 percent to assume all of the deposits of Douglas County Bank. In addition to assuming all of the deposits of the failed bank, Hamilton State Bank agreed to purchase approximately $260.9 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

    The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $86.4 million.

    www.fdic.gov/news/news/press/2013/pr13034.html

    The three branches of Parkway Bank, Lenoir, North Carolina were closed with CertusBank, N.A., Easley, South Carolina, to assume all of the deposits. The acquisition of Parkway Bank is the fifth acquisition of a failed bank by CertusBank since 2011.

    Parkway was founded August 13, 2001 they had 33 full time employees at their offices in Granite Falls, Hudson, and Lenoir. The end of year 2011, they had 44 full time employees. The stock hit a high of $14.00 a share in 2006.

    The problems started in 2008 and snowballed in construction/land loan write offs as well as very high non-current loans resulting in losses.

    Press release May 23, 2011:
    "We continue to be negatively impacted by the poor economic and financial conditions both on a national and local level. The positive signs that we are seeing are being more than offset by the overwhelming burden of asset quality issues," said James E. Sponenberg, III , President-t and CEO of Parkway Bank. "We continue to explore all possible strategic alternatives, including the raising of additional capital. We will keep you informed as we move forward in our efforts to improve the capital and financial situation of the Bank."

    It was much too late as the numbers below and by July 23, 2012 Parkway Bank's common stock was deleted from OTCBB due to ineligible for quotation on OTCBB due to quoting inactivity under SEC Rule 15c2-11.

    The numbers show up to March 31, 2013 that resulted in a Tier 1 risk-based capital ratio .0196

    (in millions, unless otherwise)

    Net Equity
    2006 $13.5
    2007 $14.4
    2008 $12.4
    2009 $8.2
    2010 $5.3
    2011 $3.4
    2012 $2.1
    3/31 $1.5

    Profit
    2006 $1.0
    2007 $702,000
    2008 -$1.8
    2009 -$4.3
    2010 -$2.9
    2011 -$2.1
    2012 -$903,000
    3/31 -$99,000

    Non-Current Loans
    2006 $429,000
    2007 $1.0
    2008 $4.3
    2009 $6.2
    2010 $9.2
    2011 $6.0
    2012 $2.6

    Charge Offs
    2006 $125,000 ( $117,000 commercial/industrial, $14,000
    construction/loan$8,000 consumer, -$15,000 1-4 family)
    2007 $257,000 ( $226,000 commercial/industrial, $19,000 1-4 family, $12, Individuals)
    2008 $1.3 ($963,000 commercial/industrial, $308,000 construction/land,$33,000 individuals, $18,000 1-4 family, $16,000 nonfarm/nonresidential)
    2009 $3.2 ($2.9 construction/land, $221,000 commercial/industrial, $12,000 1-4 family, $11,000 individuals.
    2010 $1.6 ( $1.5 construction/land, $171,000 multifamily, $25,000 1-4 family, $93,000 commercial/industrial, $11,000 individuals)
    2011 $2.9 ($1.7 construction;/land, $1.2 nonfarm/nonres.,$42,000 commercial/residential, $29,000 1-4 family,-$33,000 multi-family)
    2012 $1.2 ($$685,000 1-4 family, $151,000 multifamily, $132,000 nonfarm/nonres.,$99,000 commercial/industrial loans
    3/31 $141,000 ($80,0000 1-4 family, $56,000 multifamily, $5,000 indiv.)

    Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

    As of December 31, 2012, Parkway Bank had approximately $108.6 million in total assets and $103.7 million in total deposits. In addition to assuming all of the deposits of the failed bank, CertusBank, N.A. agreed to purchase approximately $99.2 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

    The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $18.1 million.

    www.fdic.gov/news/news/press/2013/pr13033.html

    Bank Failure Map--2013 Bank Closed Count:http://leasingnews.org/archives/Mar2013/3_28.htm#failed

    List of Bank Failure
    http://www.fdic.gov/bank/individual/failed/banklist.html

    Bank Beat:
    http://www.leasingnews.org/Conscious-Top%20Stories/Bank_Beat.htm

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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