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Posted: December 6, 2008 5:00 a.m.

The Community Bank closed by FDIC

TCB reopens as Bank of Essex

Rachel Oswald/

New ownership: The Covington branch of The Community Bank, located on Ga. Highway 142, closed on Friday and reopened on Monday as Bank of Essex.

After briefly being taken over by the state on Friday due to insolvency, The Community Bank reopened on Monday as The Bank of Essex in a purchase deal brokered by the Federal Deposit Insurance Corporation

The Georgia Department of Banking and Finance took possession of the family-owned The Community Bank of Loganville under an O.C.G.A. law, which authorizes the department to take possession of any state-chartered financial institution when it becomes either insolvent or is operating in an unsafe or unsound condition in its business transactions. Financial institutions can also request the department to take possession of their business.

Bank of Essex is a Virginia state-chartered banking subsidiary of the Community Bankers Trust Corporation. Beginning at 6 p.m. on Friday Bank of Essex assumed approximately $600 million in The Community Bank deposits. Bank of Essex has agreed to pay the FDIC a premium of 1.36 percent on all deposits or $8.16 million, excluding all brokered and Internet deposits.

The Community Bank had one branch location in Covington, located on Ga. Highway 142. The bank operated three other branches in Metro Atlanta including ones in Loganville, Grayson and Snellville. The Community Bank opened its Covington branch in the fall of 2006.

Requests for comment from The Community Bank were referred to the FDIC.

David Barr, spokesman for the FDIC, said the FDIC stepped in at the request of the state to protect the depositors of The Community Bank.

"We got involved because we got notified by the chartering authority [the state of Georgia] that the bank was going to be closed," Barr said. "Once we get that notification that the bank is going to be closed, we begin the marketing of it."

Barr said the process of lining up a buyer for The Community Bank took about two to three weeks. Potential bidders submitted their bids on Nov. 18. Bank of Essex was the high bidder.

Commissioner of the Georgia Department of Banking and Finance Rob Braswell said it was not the department’s policy to discuss the details behind the closing of specific financial institutions.

"All banks must meet certain regulatory minimums to ensure safety and soundness and when those issues are not able to be met and solvency is in jeopardy we have no choice but to close them and put them in receivership," Braswell said.

Signs pointing towards The Community Bank’s poor financial health were evident this summer when the bank had an extremely high Texas Ratio. The Texas ratio is a barometer by which the financial health of a bank is judged by looking at the ratio of bad loans and assets to the capital and reserves set aside to cover potential losses.

In September the bank’s Texas Ratio was 237 percent. A healthy Texas Ratio is considered to be any level below 40 percent. Banks get into trouble when their ratios climb past 60 percent. To have a ratio above 100 percent is a cause for serious concern.

"It’s no secret that some banks that were heavily invested into real estate loans are under stress in this environment," Braswell said.

According to Braswell, his department has had to close three state-chartered banks so far this year.

All of The Community Bank’s deposits have been fully assumed and are available immediately. All insured deposits maintain their current insurance coverage, according to a release from the Bank of Essex.

Other than loans fully secured by deposit accounts, Bank of Essex is not purchasing any loans at this time, but will be providing loan servicing to The Community Bank’s existing loan customers. Bank of Essex has 60 days to evaluate and purchase any of The Community Bank’s loans.

Former customers of The Community Bank should for the time being use the former branches of The Community Bank until Bank of Essex can fully integrate all acquired deposits. Customers can continue to access their accounts through automated teller machine transactions, checks and debit transactions.

Due to the terms of the deposit bid by Bank of Essex it is not currently anticipated that there will be any financial loss to former The Community Bank customers that have deposits exceeding the FDIC Deposit Insurance amount. Deposits at all Georgia banks are now insured by the FDIC up to $250,000.

"Since 1926, Bank of Essex has had a proud history of operating as a core community bank," said George Longest, chief executive officer of the Community Bankers Trust Corporation and Bank of Essex. "We look forward to working with the employees of [The Community Bank] in building an even stronger community banking team and serving the needs of our combined customers and the local communities in which we operate."

Community Bankers Trust Corporation is headquartered in the greater Richmond, Virginia area and has approximately $1.3 billion in assets.

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