McIntosh Commercial Bank’s four branches, including its Covington location, have failed and were taken over by the Federal Deposit Insurance Corporation late Friday afternoon. CharterBank, headquartered out of West Point, purchased all of McIntosh's $343 million in deposits and essentially all of its’ $362.9 in assets, according to an FDIC press release.
Depositors of McIntosh will automatically become depositors of CharterBank, and the McIntosh branches reopened Saturday as CharterBank branches. Depositors of McIntosh can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.
McIntosh’s name was already being removed from the Covington branch as of 6:30 p.m. Friday by Noble Signs, an Alabama-based group affiliated with CharterBank. Banners with CharterBank’s name will be put up on Monday, a Noble Signs employee said. A CharterBank was flying on the bank’s flagpole on Saturday.The current 19,000 square-foot Covington branch, located at 7200 Highway 278, was built in 2007 and is distinctive for its towering Georgian-style columns and red brick masonry. McIntosh has been in the county since May of 2006.
The FDIC said it will continue to insure former McIntosh deposits, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their former McIntosh branch until they receive notice from CharterBank that it has completed systems changes to allow other CharterBank branches to process customer’s accounts as well.
In August 2007, Rick Ward, McIntosh’s bank market president, said the Covington branch would be an anchor for McIntosh's expansion into the east Atlanta area. However, the bank has since been saddled with bad debt due to defaulted housing and construction loans. As of October 2008, the bank had a Texas Ratio of 113; anything over 100 means a bank may be in danger of failing. The Texas Ratio is the ratio of bad loans and assets to the capital and reserves set aside to cover potential losses.
At the time, Jan Teal, chief executive officer of McIntosh, said she didn’t think the Texas ratio was a "totally fair reflection of the banking institution."
"Those numbers may not be as we may like them to be but McIntosh remains well capitalized. We also have strong loan loss reserves set aside," Teal said in October 2008. "All of that keeps us positioned extremely well to work through this challenging economic time we’re in."
However, the bank’s situation continued to worsen and, as of Feb. 16, the McIntosh headquarters had a Texas Ratio of 884, by far the highest in Georgia.
As part of the FDIC’s sale agreement, CharterBank will agree to share losses with the FDIC on $263 million of McIntosh’s former assets.
Customers who have questions about today's transaction can call the FDIC toll-free at 1-800-450-5668. Interested parties also can visit the FDIC's Web site at fdic.gov/bank/individual/failed/McIntosh.html.
The FDIC estimates that the cost to the Deposit Insurance Fund will be $123.3 million. CharterBank's acquisition of all the deposits was the "least costly" resolution for the FDIC.
McIntosh is the 41st bank to fail in the U.S. this year, and the sixth in Georgia.
McIntosh was founded in late 2002 and previously had six branch locations in Georgia, two of which were closed before 2010.
According to the Associated Press, the number of banks on the FDIC's confidential "problem" list jumped to 702 in the fourth quarter of 2009, up from 552 three months earlier, even as the industry squeezed out a small profit. Still, nearly one in every three banks reported a net loss for the latest quarter.
There were 140 bank failures last year - highest annual tally since 1992, at the height of the savings and loan crisis. They cost the insurance fund more than $30 billion. There were 25 bank failures in 2008 and just three in 2007. The FDIC expects the cost of resolving failed banks to grow to about $100 billion over the next four years.
According to the Atlanta Business Chronicle, this is the second failed-bank purchase made by CharterBank; it acquired the four branches of the failed Neighborhood Community Bank of Newnan last June.
CharterBank, founded in 1954, is now a $1.2 billion-in-assets bank holding company with 17 bank branches, according to the chronicle.