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One Small Georgia Bank is Closed by Regulators

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One Small Georgia Bank is Closed by Regulators

After a 3-week break, the FDIC was back in action this Friday with a Georgia bank failure. Montgomery Bank & Trust was closed by Georgia regulators, and the FDIC arranged for Ameris Bank to assume all of the failed bank's deposits.

This latest closure brings the number of bank failures for the year to 32. At this time last year, there had been 51 bank failures for the year, and at this time in 2010 there had been 90 bank failures.

Georgia adds to its lead as the state with the most bank failures. It now has 6 for the year. Florida remains in second with 4 bank failures.

One interesting thing to note about this closure was the large estimated cost to the FDIC's Deposit Insurance Fund (DIF). It was $75.2 million. As a comparison, none of the 3 banks which failed on June 15th cost the DIF more than $38 million, and all 3 banks were close in size to Montgomery.


Update 7/7/2012: This might explain why this failed bank's cost to the DIF was so high. According to ajc.com:

A former bank director and investment adviser is accused of wire fraud that could have cost the bank $17 million.

The SEC issued this press release about this former bank director and investment advisor.


The FDIC arranged for Ameris Bank to assume all deposits, even deposits over the FDIC limit. The FDIC's Q&As for this bank had the same message: "no one lost any money on deposit as a result of the closure of this bank".

Ameris Bank did not have any news on its website regarding what will happen to CD rates at Montgomery Bank & Trust. The FDIC gave its typical paragraph on interest rates in its Q&As:

Interest on deposits accrued through close of business on July 6, 2012 will be paid at your same rate. Montgomery Bank and Trust's rates will be reviewed by the new bank and may be lowered; however, you will be notified in writing of any changes. You may withdraw funds from any transferred account, regardless of whether your interest rate changes, without early withdrawal penalty until you enter into a new deposit agreement with the new bank.

There were no credit union liquidations this week. The number of credit union liquidations for the year remain at 7. The last 2 closures took place on May 31st and June 1st.

Below is the summary of today's bank failure:

32nd Bank Failure of 2012 (6th in Georgia)

  • Closed Bank: Montgomery Bank & Trust, Ailey, GA
  • FDIC Press Release
  • Size: 2 branches, $173.6 million in assets and $164.4 million in deposits
  • Acquiring Bank: Ameris Bank, Moultrie, GA
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. deposits, have been assumed by Ameris Bank
  • Rate Changes: Montgomery Bank and Trust's rates will be reviewed by the new bank and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $75.2 million
  • Enforcement Action: FDIC 10/6/09 C&D Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 868.30% at DepositAccounts.com (see financial rating note)

Financial Ratings Notes: 0 star is lowest at BauerFinancial, 1 star is lowest at DepositAccounts.com & Bankrate.com, Texas Ratios over 100% is considered at risk. Ratings at DepositAccounts.com and BauerFinancial are based on March 2012 data. Ratings at Bankrate.com are based on December 2011 data.

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