Georgia, Which Leads The Nation This Year In Failed Banks, Sees Another One Go Down

Another Georgia bank has failed. The Mountain Heritage Bank of Clayton, Georgia, was closed Friday by the Georgia Department of Banking and Finance, which appointed the Federal Deposit Insurance Corporation as receiver. 

There are a couple of notable aspects to this bank failure. First, this was the 48th FDIC-insured institution to fail in the nation this year. Because this past Friday was the last Friday in June, and thus Mountain Heritage will be the last bank to fail in June, one can estimate that we are on track for 96 failed banks this year – under 100!
 
In addition, this was the 14th bank to fail in Georgia this year. We’ve noted that Georgia leads the nation in failed banks (see Another (!) Georgia Bank Fails – No. 13 In 2011), and now it will hold that “honor” for the first six months of this year.
 
Regarding the Mountain Heritage failure: the FDIC entered into a purchase and assumption agreement with First American Bank and Trust Company of Athens, Georgia, which assumed all of the deposits of Mountain Heritage Bank.
 
As of March 31, 2011, Mountain Heritage Bank had approximately $103.7 million in total assets and $89.6 million in total deposits. In addition to assuming all of the deposits of the failed bank, First American agreed to purchase essentially all of the assets.
 
The FDIC and First American Bank and Trust Company entered into a loss-share transaction on $69.2 million of Mountain Heritage Bank's assets. First American Bank and Trust Company will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector.
 
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $41.1 million.