Christopher Menkin's  Instablog

The three branches of Global Commerce Bank, Doraville, Georgia, were closed with Metro City Bank, Doraville, Georgia, to assume all of the deposits. Founded August 18, 1995 to service Atlanta, Marietta, Sandy Springs, the bank had 29 full time employees as of December 31, 2011 at three offices in Doraville, Johns Creek, and Norcross.

Metro City Bank is also a Asian-American Bank, April 4, 2006 and as of December 31, 2011 had 54 full time employees are their two offices in Suwannee, one in Doraville, Duluth, and Johns Creek. This adds to branches then in Doraville and Johns Creek.

One of the major differences is as of December 31, 2011, Metro City Bank had Tier 1 risk-based capital ratio that was a very healthy 16.02%, whereas Global Commerce Bank had 1.08%, extremely low.

To understand both banks marketplace, it is best to look at their geographic marketplace:

Doraville is a small town, 15 miles northeast of Atlanta on Highway I-85. In 2010 the population was 8,330. The main business was a GM plant, which closed in 2009.

Norcross is 20 miles northeast of Atlanta along I-85 with a population 2010 US Census Population 9,116.

Johns Creek, 27 miles northeast of Atlanta, is the tenth-largest municipality in Georgia and its wealthiest city, according to Wikipedia and was incorporated December 1, 2006. 2010 US Census population was 76,728. It appears there is a commute problem coupled with no money to repair its roads.
www.ajc.com/news/north-fulton/johns-cree...

Where were they getting their deposits and business?

Global Commerce Bank was an overseas Chinese bank, privately held, offering credit instruments, such as letters of credit to facilitate international trade, and in2003 was ranged the 9th best performing bank amongst 323 banks in Georgia, according to Wikipedia, very active in SBA loans. As can be seen by the locations, much of the lending appears out of thier geographic footprint.

Metro City Bank year-end 2011 equity was $52.2 million, showing a profit of $5 million and $2.9 million in non-current loans, after a charge off of $3 million ($2.7 million nonfarm nonresidential properties and $334,000 in commercial and industrial loans.

Tier 1 risk-based capital ratio was a very healthy 16.02%.

www.metrocitybank.com/a_about.htm
(People not identified, photo from: www.metrocitybank.com/a_about.htm)

Metro City Bank is also a privately held bank, specializing in the Asian-American marketplace. Chairman Nack Y. Paek, a CPA, and according to his biography, "President of a successful SBA service provider."

There is another CPA on the board, a jewelry manufacture, general surgeon, fashion jewelry wholesaler who served in the Korean Army, a native of Malaysian in real estate, a native Hong Kong in private label fashion, a controller with a trading company, a South Korean in the jeweler business, a Patel hotel owner, an account now finance manger of Trends Menswear, another CP, degree from Korea, and Farid Tan, president and CEO, banker from Malaysia. Senior VP and Chief Loan Officer, Hwa Saeng Kim, with banking experience in Korea as well as serving the banks Amsterdam office.
www.metrocitybank.com/ir_bios.htm#paek

Note: Metro City Bank gains healthy deposits as of December 31, 2011. Global Commerce Bank had approximately $143.7 million in total assets and $116.8 million in total deposits. In addition to assuming all of the deposits of the failed bank, Metro City Bank agreed to purchase approximately $79.0 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

Global Commerce Bank problems started in 2009.The main defaults and charge offs came form lines of credit and commercial loans. The nonfarm nonindustrial charge offs went from $1.6 million in 2009, to $4.6 million in 2010, and $3.5 million in 2011. Nonfarm Nonresidential as defined by FDIC are liens secured by real estate on business and industrial properties, such as hotels, motels, churches, hospitals, education and charitable institutions, association buildings, golf courses, recreational facilities and similar properties; source of repayment is the cash flow from the ongoing operations and activities conducted by the borrower.

The numbers below tell much of the story about what happened:

(in millions, unless otherwise)

Net Equity
2006 $14.6
2007 $16.1
2008 $17.2
2009 $16.3
2010 $7.8
2011 $1.1

Profit
2006 $1.6
2007 $1.1
2008 $1.2
2009 -$2.0
2010 -$7.9
2011 -$7.8

Non-Current Loans
2006 $423,000
2007 $523,000
2008 $1.3
2009 $4.1
2010 $10.7
2011 $14.9

Charge Offs
2006 $284,000 ($151,000 1-4 family residential, $135,000 commercial and industrial, -$2,000 indiv.)
2007 -0-
2008 $34,000 ($31,000 commercial and industrial, $3,000 individuals)
2009 $3.4 ( 1.6 nonfarm nonindustrial, $1.4 commercial/industrial, $259,000 1-4 fam.,$20,000 indiv.)
2010 $4.9 ($4.6 nonfarm nonindustrial, $206,000 commercial/industrial, $18,000 individual)
2011 $3.7 ($3.5 nonfarm nonindustrial, $114,000 commercial industrial, $74,000 1-4 family)

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

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $17.9 million.

www.fdic.gov/news/news/press/2012/pr1202...

List of Bank Failures:
www.fdic.gov/bank/individual/failed/bank...

Bank Beat:
www.leasingnews.org/Conscious-Top%20Stor...

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