By J. Scott Trubey
The Atlanta Journal-Constitution
Regulators seized and sold two more struggling metro Atlanta banks Friday, the 15th and 16th failures in Georgia this year.
Stockbridge-based High Trust Bank and Atlanta-based One Georgia Bank were seized and sold to Ameris Bank of Moultrie. The banks will reopen under the new flag during normal business hours beginning Saturday, the Federal Deposit Insurance Corp. said.
Georgia leads the nation with 67 failures since mid-2008.
High Trust had total assets of $192.5 million and deposits of $189.5 million, and One Georgia had total assets of $186.3 million and deposits of $162.1 million, according to the latest FDIC data.
The FDIC said Ameris agreed to purchase the bulk of the two banks’ assets and all of their deposits in a loss-share transaction. The regulator estimates the failures will result in a $110.4 million combined loss to its insurance fund, which protects depositors.
Ameris, one of the largest banks in South Georgia, has been an active buyer of failed institutions in this state and in Florida. Ameris has now acquired eight failed banks over the past two years.
Chris Marinac, bank analyst with FIG Partners in Atlanta, predicts “at least 10 more Georgia institutions could close this year.”
The state's banks are preparing second-quarter earnings reports, and if the quarter was a poor one, those reports “may suggest a slightly higher number,” Marinac said.
Like virtually all other Georgia banks, High Trust and One Georgia suffered heavy losses in real estate loans. But for these banks the losses were largely in commercial, not residential, real estate.
High Trust traced its roots to 1907, when it was founded as the Bank of Leary in the tiny town southwest of Albany.
In 2007, after two earlier name changes and a relocation of its headquarters to Henry County, the bank was renamed High Trust.
Prominent members of the Indian-American business community joined as investors and directors, and High Trust ramped up for growth in the hot Southside real estate market. But its growth spurt started as the global economy started its plunge into recession.
The bank lost more than $17 million from January 2009 to March 2011, according to FDIC data.
Some of those new investors and directors also had ties to two other largely Indian-American-owned institutions: Duluth-based Haven Trust Bank, which failed in December 2008, and Haven Trust Bank of Ponte Vedra Beach, Fla., which failed last year.
On Thursday, the FDIC sued 15 former insiders at Haven Trust of Duluth, accusing them of gross negligence and other breaches of duty that resulted in about $40 million in losses to that bank.
Two of the named defendants in the case, brothers R.C. Patel and Mukesh “Mike” Patel, once served as vice chairman and chairman, respectively, at High Trust.
The Haven Trust defendants, through their attorney, have strongly denied wrongdoing and vowed to fight the suit.
One Georgia was founded in 2006 and operated a single office in the posh 1180 Peachtree building in Midtown Atlanta.
Insiders at One Georgia have included former Public Service Commission member and state Republican Party Chairman Billy Lovett, well-known lobbyist and former state senator Arthur “Skin” Edge IV and former Kennesaw State University President Betty Siegel.
The bank, which ultimately became a heavy lender through U.S. Department of Agriculture and Small Business Administration programs, suffered losses of $22.3 million from January 2009 to March 2011, according to FDIC data.
During the financial crisis, One Georgia received $5.5 million in federal bailout funds, none of which had been paid back as of March 31, according to a special inspector general’s report.
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