Freedom Bank of Georgia based in Commerce became the 17th bank taken over so far in 2009 by the FDIC.
Freedom Bank was taken over Friday evening at 6 p.m. by state and federal banking officials. All deposits of the bank were acquired by Northeast Georgia Bank of Lavonia.
The bank had four branches: Homer, Jefferson, Commerce and Winder.
“Depositors of Freedom Bank of Georgia will automatically become depositors of Northeast Georgia Bank,” said a news release about the closure. “Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until Northeast Georgia Bank can fully integrate the deposit records of Freedom Bank of Georgia.
Freedom Bank, which was organized in 2004, is the second bank in Georgia closed this year and the seventh since the middle of 2008 when bank failures begin to rise due to the economic downturn. It is the only bank seized in Banks County in the wake of the housing bust, which has devastated the area’s real estate and construction market.
In December, Freedom Bank was issued a cease and desist order by regulators, which instructed the bank to take certain actions to shore up its financial standing.
At the end of the third quarter in 2008, the bank had 11 percent of its loan portfolio, $12 million, in default according to the FDIC. The bank lost $8.5 million in 2008, according to the FDIC.
According to the FDIC’s news release Friday night, the bank had total assets of around $173 million and deposits of $161 million as of March 4. Northeast Georgia Bank agreed to purchase $167 million in assets at a discount of $13.6 million.
The FDIC estimates that the cost to the Deposit Insurance Fund will be $36.2 million. Northeast Georgia Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's Deposit Insurance Fund compared to alternatives.