Troubled Georgia banking industry experiences first failure of the new year
01/23/2012
With 76 bank failures since January 2007, Georgia has had more than any other state,
and the trend is continuing with the first closure of 2012. Regulators closed First State Bank
in Stockbridge, on Friday. With assets of $536.9 million at September 30, Weiss rated the bank
E- ("Very Weak") at the time of failure and first identified it as "Weak" in December 2007. The
bank reported a loss of more than $10.6 million for the first nine months of 2011, had far
below-FDIC-mandated Tier 1 (5%) and risk-based capital (6%) ratios of 0.78% and 1.92%, respectively,
and nonperforming loans represented 24.7% of its total loan portfolio.
Hamilton State Bank in Hoschton, Georgia, with assets of $921.8 million and a Weiss Financial
Strength Rating of C ("Fair"), assumed the deposits of First State Bank. Hamilton has high Tier 1 and
risk-based capital ratios of 13.20% and 44.71%, respectively, but nonperforming loans make up an above-average
portion of its total loan portfolio of 5.48%. It earned $11.1 million for the nine months ending September 30,
2011 for an ROA of 2.46%, two and a half times higher than the industry average of 0.94%.