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American Southern Bank of Georgia fails, bringing that state's tally to
10. The closure should cost the FDIC an estimated $41.9 million. NEW YORK (CNNMoney.com) -- American Southern Bank failed Friday,
bringing this year's total to 26, according to the government. The first
four months of this year have now seen more banks fail than all of 2008,
when 25 banks went bust.
The Kennesaw, Ga.-based bank was shuttered by the Georgia Department of
Banking and Finance and the Federal Deposit Insurance Corporation was
named the receiver. With 10 bank failures, Georgia has the most bank
closures of any state since the crisis intensified at the start of last
year. As of March 30, American Southern had total assets of $112.3 million and
total deposits of $104.3 million. Alpharetta, Ga.-based Bank of North Georgia has agreed to take over all
of the deposits, except brokered accounts, at a premium of 0.003%. The bank failure will cost the Deposit Insurance Fund approximately
$41.9 million, according to the FDIC. For the failed bank to be absorbed
by Bank of North Georgia was the "least costly" option for the FDIC,
said the agency in a statement. The single office of the failed bank will reopen on Monday as a branch
of Bank of North Georgia. Through the weekend, customers of the failed banks can access their
money by writing checks or using ATM or debit cards. Checks drawn on the
banks will continue to be processed and loan customers should continue
to make their payments as usual. The FDIC will continue to fully insure individual accounts up to
$250,000 through the end of 2009. For the $48.7 million in brokered deposits held by the failed bank that
Bank of North Georgia did not agree to take over, the FDIC will pay the
brokers directly for the amount of their funds. Customers are advised to
contact them directly for more information about the status of their
deposits.
Banks in a bind The recession has left regional banks reeling, with cash-crunched
consumers struggling to pay off their loans. As banks remained skittish about lending, the federal government stepped
in with a series of financial rescue efforts aimed at restoring
confidence and jumpstart lending. This week, Bank of America (BAC, Fortune 500) surprised Wall Street by
reporting a much better-than-expected first-quarter profit of $4.2
billion, but Chief Executive Ken Lewis warned of "deteriorating credit
quality." Investors remain concerned over just how prepared the banks are to
absorb any further losses. The Obama administration has been conducting
"stress-tests" on 19 of the nation's banks with more than $100 billion
in assets at the end of 2008 to determine how well prepared they are to
survive further economic turmoil. Friday, banking regulators offered up a 21-page report about the stress
tests but it was sparse on details. It acknowledged that most U.S.
lenders were currently well capitalized, but that losses associated with
the recession and turmoil in the financial markets had eroded the
capital levels of some financial institutions. The full assessment will
be released May 4.
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