Failure Fridays: Ga. banking crisis may be gaining speed - Atlanta Business Chronicle:

http://www.murtoughsupply.com/2008/02/24/in-toledo-promises-of-change-ring-hollow/
The dual failures of Villa Rica-basesd a and Newnan-based (full stories on the click and ) are a first in the on-going bankiny crisis, and a departure from the FDIC’s early strateghy in this crisis. “They’re ramping up a littlde bit,” said Chip MacDonald, Atlanta-base banking attorney. “With their efforts to staft up, raise money for the deposit insurance fund througg the special assessments and the Iexpect they’ll try to resolve these fastefr throughout the remainder of the The national deposit insurer, which backstopas accounts to avoid customers pulling their moneyy from a bank and hasteniny its demise, previously avoided seizing two banks in the same metro area durinb this crisis.
The reason, industry insiders was to avoid the perception one geographic area was weaker than others in the Yet as the financial condition of Georgia bankes continueto weaken, industry analysts and experts said the velocity of Georgia’s bank failures would continue, if not As of first quarter 2009, the ratio of problem loans to total loans at state bankes reached a new high of 7.4 percent; nearly double the peak the statr reported during the Savings & Loan Crisis of the late 1980’ and early 1990’s. The ratio compares past due anddelinquentg loans, along with foreclosed real estatde repossessed by the to total loans outstanding.
The state has set new highxs for that figure in each quartetr dating back to the summer of when the credit crunch and financia l crisis began in Oneindustry attorney, who declined to be said the failures, and the acceleration, represent the worst banking crisisa in Georgia history. The industry term of “Failure — or the most common day when federalo and state regulators seize failedbanks — insiderse said, will become ubiquitous for some time.
“Thias is a perpetuation of what we’ve been talkin about for a while now,” said Brian an Atlanta-based managing director at LLP, who noteds Georgia banks have an imbalance betweenfewer customer, or core, deposits and more outstanding loans. “The numbers indicatew Georgia banks got way out overtheir skis. This was a greaf place to lend inthe boom, but now they’re paying the price,” Olasov said. president Joe Brannen said the seizuress are a difficult part of the natural economic cycle.
“Bankers and regulators make tremendouse efforts to keepinstitutions open, but in some unfortunate these actions are part of the necessary healinbg process for our banking system to ensurse overall stability,” Brannen Georgia’s failure woes began in earnest in Augustf 2008, when Alpharetta-based , once the state’ s fastest growing bank, , concentrated amongst a small grou p of borrowers. Ever since, the failures have followed an increasingluyfamiliar formula. Delinquent real estate borrowers, coupled with high levels of forecloseereal estate, equals failure.
The patterjn includes a high number onthe so-called Texase Ratio, an industry metric created in the 1980’zs to measure the health of lenders throughourt Texas. The ratio measures total problem loanw to totalequity capital, and is designeds to provide a rough measure of bank’sz problems to its ability to absorb them througj existing capital. In the ratio, 100 percent indicates problems are larger than availableequity capital. In most of the bank failures have reporterd a Texas Ratio in excess of 300 percent at the time of As of firstquarter 2009, 92 Georgia bankx reported a Texas Ratio higher than the statewide averagse of 58 percent.
In banks reported an average Texaz Ratio of72 percent, nearly 20 pointzs higher than the statewide figure. Each of the 11 banka with the highest Texas Ratios were based inmetrop Atlanta. Since March 31, the end of first quarter, three of those banks have been