2 more small Ga. banks fail; making it 23 in past year

That toxic formula claimed two more small Georgia lenders on Friday: First Coweta Bank of Newnan and ebank of Atlanta.

They were closed by regulators, bringing the number of bank failures in Georgia to 23 over the past year, including six owned by one holding company. That is the most in any state.

First Coweta was seized by federal and state regulators after losing $14 million in the past 18 months, including $4 million in the second quarter. The bank’s four branches and most of its $155 million in deposits were acquired by United Bank of Zebulon.

First Coweta branches will re-open Saturday as United Bank.

Ebank’s lone branch and its $130 million in deposits were acquired by Stearns Bank of St. Cloud, Minn., which also took over failed Alpha Bank of Alpharetta last October. The ebank branch will reopen Monday as Stearns Bank.

The Federal Deposit Insurance Corp. entered into loss-sharing arrangements with both United and Stearns banks on the bulk of the failed banks’ loan portfolios.

First Coweta, founded in 2004, quickly ramped up to capitalize on the then-booming real estate market. Its real estate loan portfolio more than doubled between 2005 and 2007 to $131.4 million.

But borrowers fell behind on payments as the housing market collapsed and recession set in. The bank reported $19 million in troubled loans as of June 30, and its capital cushion tumbled from $15 million in 2008 to $3.3 million earlier this year.

Ebank, based in Vinings, was founded in 1998 with ambitious plans to hook up with a nationwide ATM network to enable customers to use “smart cards” to access online accounts.

That initiative was unsuccessful, and in 2000 the bank shifted its focus to community banking. As of March 31, 90 percent of its $97 million loan portfolio was concentrated in real estate. Ebank lost $7 million last year and $1.2 million in the first quarter.

The FDIC estimates the failures will cost its insurance fund $63 million for ebank and $48 million for First Coweta.

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