Dive Brief:
- LaGrange, Georgia-based Community Bank & Trust - West Georgia was closed by Georgia bank regulators Friday, marking the second bank failure of the year.
- Palm Beach Gardens, Florida-based Anchor Bank assumed substantially all of the failed lender’s insured deposits Friday and agreed to acquire certain assets under a deal with the Federal Deposit Insurance Corp., which acted as receiver.
- The Federal Reserve ordered Community Bank & Trust’s holding company last month to bolster board oversight and senior management, and improve its capital position.
Dive Insight:
Community Bank & Trust’s three branches were set to reopen Monday as branches of Anchor Bank, the FDIC said.
The FDIC projected the failure will cost the Deposit Insurance Fund about $97 million, although that estimate is expected to change as retained assets are sold.
The Georgia bank had $288 million in assets and $268 million in deposits as of Dec. 31. About $27 million of its deposits exceeded FDIC insurance limits, although the agency said that amount is expected to change once it receives additional information.
A January inspection by the Federal Reserve Bank of Atlanta revealed operational deficiencies with Community Bankshares, the now-failed bank’s holding company, including “with respect to pursuit of its growth strategy, related to board oversight, capital, and compliance with the rules related to affiliate transactions,” the Fed said.
The lender had embarked on a growth strategy that involved purchasing and originating U.S. Department of Agriculture and Small Business Administration loans through nonbanks, which demanded “significant financial and managerial resources and support” from Community Bankshares, the central bank said.
Under the Fed order, Community Bankshares was directed to immediately conserve capital and told not to incur, increase, prepay or guarantee any debt without approval.
The Georgia Department of Banking and Finance said it’s authorized to take possession of a state-chartered financial institution if the lender is insolvent or operating in an unsafe or unsound condition; is operating in violation of a court order, statute, rule or regulation; or if the bank requests the department take possession of its business.
The transaction boosts Anchor Bank’s asset total to $875 million, the bank said in a Friday news release. It’s also the first expansion beyond Florida for the privately held, state-chartered community bank, which has five branches in the southern part of the state, an Anchor spokesperson said.
Anchor CEO Nelson Hinojosa said the bank’s “immediate priority is to ensure a smooth transition and continuity of service.”
“We are pleased to expand Anchor Bank’s footprint into LaGrange and the broader Georgia market, and to begin serving this vibrant community,” Hinojosa said in a statement to Banking Dive. “Our approach to banking is relationship-driven and rooted in a commitment to quality service, and we look forward to bringing a friendly, responsive, and client-focused experience to our new customers. We are excited to build strong relationships and become a trusted partner in the continued growth of the Georgia community.”
Customers of each bank should continue using their existing branches until Anchor Bank can fully integrate Community Bank & Trust’s deposit records, the Georgia banking department said.
Customers of Community Bank and Trust will have immediate access to their insured deposits, and checks drawn on the bank will continue to be processed, the FDIC said. Loan payments should be made as usual, the agency said.
Spokespeople for Community Bank & Trust didn’t immediately respond to a request for comment.
The bank failure is the second to occur this year. Chicago lender Metropolitan Capital Bank & Trust failed in January, and Detroit-based First Independence Bank assumed substantially all of the failed lender’s $212.1 million in deposits, and $251 million of its $261.1 million in assets.
Community Bank & Trust is also the largest bank to fail since Republic First Bank did in 2024. The Philadelphia lender had about $6 billion in assets at the time it failed.
