Published Tuesday, June 30, 2009

Bank says transition smooth

The Times-Herald

It was "business as usual" Monday and over the weekend at CharterBank -- formerly the failed Neighborhood Community Bank -- according to the FDIC.

"It's been a smooth transition from Neighborhood Community Bank to CharterBank," said Marvin Payne, FDIC ombudsman, who was on hand for the takeover Friday in Newnan.

"Everything is remaining the same, for now," said Payne. "The only difference the customers will see is a change in the name of the institution.

"But the products and services that were made available last week, those same products and services now exist for the customers of CharterBank."

On Friday morning a petition for appointment of a receiver was filed in Coweta County Superior Court by the Georgia attorney general's office. The petition included a resolution drawn up by the Neighborhood Community Bank board of directors on June 17, stating that the "financial condition of Neighborhood will not permit it to meet the requirements" of a Sept. 2, 2008 written agreement with the Federal Reserve Bank of Atlanta and the Commissioner of the Department of Banking and Finance.

"Neighborhood's capital position as of June 17, 2009 has been determined to be at a level that represents a significant safety and soundness exposure to the institution, and places Neighborhood at a risk of becoming critically undercapitalized," the Board of Directors stated. The board -- which no longer controls the bank -- included Joe S. Crain Jr., Otis Jones III, David LaGuardia, Dr. Bob Mann, Jr., Theo Mann, J. Walker Moody, James Van S. Mottola, Melvin Samuels, Donald Sprayberry, and Jennifer Thomasson.

The FDIC was immediately appointed as receiver by the court.

"As former Neighborhood Community Bank customers, you are now customers of CharterBank. Your deposits are safe, sound and readily accessible," said CharterBank CEO Robert Johnson in an open message on the bank Web site.

CharterBank has 10 retail locations along the I-85 corridor from Auburn, Alabama to LaGrange, Georgia, and loan production offices in Columbus, Newnan and Norcross.

Neighborhood Community Bank is Georgia's ninth bank failure this year, and the 45th nationwide. Georgia leads the nation in bank failures, despite being home to just four percent of the country's banks.

Joe Brannen, president and CEO of Georgia Bankers Association, said Monday, "Bankers and regulators make tremendous efforts to keep institutions open, but in some unfortunate cases, these actions are part of the necessary healing process for our banking system to ensure overall stability.

"Bank performance, like that of other businesses, is a direct reflection of local economic conditions. The economy and local real estate market remains weak, so some banks continue to struggle."

Neighborhood's failure was "mostly due to high levels of distressed construction and development loans," Brannen said.

"While there have been several closures in a short period, 92 percent of the banks operating in Georgia meet the criteria for being well capitalized by regulators and have adequate reserves to weather the ongoing stresses to the economy," he said.

"Each bank's financial stability should be evaluated on its own merits. Speculation about other institutions based on today's news could cause unnecessary worry about banks that are doing just fine."

Payne agreed that "the last thing anyone wants to do is trigger a bank run."

That's why the FDIC does not give advance notice of bank failures, Payne said.

"The FDIC does not comment on the affairs of open banks," he said -- including First Coweta Bank, Newnan's other local bank operating under an agreement with regulators to "cease and desist from unsafe and unsound practices."

"The intent is to give an operating institution every opportunity to address whatever issues they need to address to allow the entity to continue as a going concern," said Payne.

"If the FDIC were to speak publicly about an institution, it could cause that institution more harm than good," he said.

Since the FDIC insures the deposits, customers should have little reason for concern, in any case, he said.

"At Neighborhood Community Bank, no one lost a cent" of their deposits, he said.

"Over the next several weeks we will be working to complete the transition process to CharterBank," said Johnson. "There will be new signage, but the same friendly faces you've come to know will be there ready to serve you.

"You won't believe the good things coming your way, and trust me we're truly excited to become a part of your community."