Banking & Finance

NEWS - Banking & Finance

SBJ Staff Report

Jan 23, 2012 - After a two month break, another Georgia bank was closed on Friday, The First State Bank, in Stockbridge. The Hamilton State Bank in Hoschton assumed all of the deposits, in an agreement with the FDIC.

As of 9/30/2011, The First State Bank had approximately $536.9 million in total assets and $527.5 million in total deposits, a large community bank by Georgia standards.

The former The First State Bank locations will reopen today as branches of Hamilton State Bank during regular business hours.

All shares of The First State Bank were owned by its holding company, Henry County Bancshares, Inc., of Stockbridge, GA. The holding company was not included in the closing of the bank or the resulting receivership.

Hamilton State Bank has agreed to pay the FDIC a premium of 0.50 percent on all assumed deposits, but the FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $216.2 million, according to the FDIC Southeast’s office headquartered in Jacksonville.

The First State Bank is the first Georgia bank to be closed in the first few weeks of 2012.  In the Savannah area, there are at least three banks operating under letters of agreement with the FDIC that call for increasing their capitalization versus troubled loans, and enhancing management procedures including First Chatham Bank, The Heritage Bank, and The Coastal Bank.

On January 31, all banks in the U.S. must report their 4^th Qtr. financial results which will provide more insight into the progress being made by Georgia banks to work through troubled residential and commercial loan portfolios.  

NEWS - Banking & Finance

by Lou Phelps, SBJ Staff

Jan 23, 2012 - As receiver for a failed financial institution, the Federal Deposit Insurance Corporation (FDIC) may sue professionals who played a role in the failure of the institution in order to maximize recoveries. Potential suits are hanging over the heads of a number of Georgia banking execs, with current suits against four in Georgia announced to date. 

But it can take the FDIC years to bring the suits against the bank executives who ran failed banks   So last week, the FDIC issued a report to explain the process of bringing the suits to recover taxpayers money.

These individuals can include officers and directors, attorneys, accountants, appraisers, brokers, or others. Professional liability claims also include direct claims against insurance carriers such as fidelity bond carriers and title insurance companies.

The FDIC Board must approve before actions are brought against directors and officers.

Professional liability suits are only pursued if they are both meritorious and cost-effective. Before seeking recoveries from professionals, the FDIC conducts a thorough investigation into the causes of the failure. Most investigations are completed within 18 months from the time the institution is closed. Prior to filing the claim, staff will attempt to settle with the responsible parties. If a settlement cannot be reached, however, a complaint will be filed, typically in federal court.

In other words, if a ‘settlement’ is reached, the public is not aware that it has taken place.

As receiver, the FDIC has actually has three years to bring a tort claim, and six years for breach-of-contract claims  - a lot of time to file suit from the time a bank is closed. If state law permits a longer time, the state statute of limitations is followed.

Professionals may be sued for either gross or simple negligence. The Supreme Court has ruled that the FDIC may pursue simple negligence claims against directors and officers if state law permits (Atherton v. FDIC). Federal law preempts state law that insulates directors and officers from gross negligence or worse conduct. Bank directors are allowed to exercise business judgment without incurring legal liability.

Not all bank failures result in Director and Officer (D&O) lawsuits. According to the FDIC, it  brought claims against directors and officers in 24 percent of the bank failures between 1985 and 1992.

From 1986 through 2009, the FDIC and Resolution Trust Corporation collected $6.2 billion from professional liability claims. Over that same time, they spent $1.5 billion to fund all professional liability claims and investigations. Early in the process of professional liability claims, expenses will often exceed recoveries due to the costs incurred in handling new investigations. Professional liability program recoveries lag expenses by several years until settlements occur and judgments are awarded.

As of January 18, 2012, the FDIC has authorized suits in connection with 44 failed institutions against 391 individuals for D&O liability with damage claims of at least $7.7 billion. This includes 19 filed D&O lawsuits (2 of which have been dismissed after settlement with the named directors and officers) naming 161 former directors and officers. The FDIC also has authorized 28 other lawsuits for fidelity bond, insurance, attorney malpractice, appraiser malpractice, and RMBS claims. In addition, 189 residential mortgage malpractice and fraud lawsuits are pending, consisting of lawsuits filed and inherited.

                                    Authorized D&O Defendants Damage Claims*   

Authorized in 2009     11        $   366,000,000

Authorized in 2010     98        $2,122,900,000

Authorized in 2011   264        $5,109,920,000

January 2012              18        $     85,800,000

Total                        391        $7,684,000,000

*Losses typically exceed these amounts and may result in higher damage claims in filed lawsuits. Recovery on these claims is dependent upon available recovery sources, such as insurance and personal assets, and competing claims.

Current D&O Suits Filed:

FDIC as Receiver of Integrity Bank of Alpharetta, GA v. Skow, et al., Case No. 1:11-cv-00111-JEC (U.S. District Court for the Northern District of Georgia Filed Jan. 14, 2011).  BANK WAS CLOSED: 

FDIC as Receiver of Haven Trust Bank v. Briscoe, Case No. 1:11-cv-02303-SCJ (U.S. District Court for the Northern District of Georgia Filed Jul. 14, 2011).  BANK WAS CLOSED: 

FDIC as Receiver for Silverton National Bank, N.A. v. Bryan, Case No. 1:11-cv-02790-JEC (U.S. District Court for the Northern District of Georgia Filed Aug. 22, 2011).   BANK WAS CLOSED: 

FDIC as Receiver for Alpha Bank v. Blackwell, Case No. 11-cv-03423 (U.S. District Court for the Northern District of Georgia Filed Oct. 7, 2011).  BANK WAS CLOSED: 

FDIC as Receiver of Corn Belt Bank and Trust Company v. Stark, et al., Case Number 3:11-cv-03060-SEM-BGC (U.S. District Court for the Central District of Illinois Filed Mar. 1, 2011).

FDIC as Receiver of IndyMac Bank, F.S.B. v. Van Dellen, et al., Case No. 2:10-cv-04915-DSF-CW (U.S. District Court for the Central District of California Filed Jul. 2, 2010).

FDIC as Receiver of Heritage Community Bank v. Saphir, et al., Case No. 1:10-cv-07009 (U.S. District Court for the Northern District of Illinois Filed Nov. 1, 2010).

FDIC as Receiver of 1st Centennial Bank v. Appleton, et al., Case No. 2:11-cv-00476-JAK-PLA (U.S. District Court for the Central District of California Filed Jan. 14, 2011).

FDIC as Receiver for Washington Mutual Bank v. Killinger, et al., Case No. 2:11-cv-00459-MJP (U.S. District Court for the Western District of Washington Filed Mar. 16, 2011).

FDIC as Receiver for Wheatland Bank v. Spangler, et al., Case No. 10-cv-04288 (U.S. District Court for the Northern District of Illinois Filed May 5, 2011).

FDIC as Receiver of IndyMac Bank, F.S.B. v. Perry, Case No. 11-cv-05561-ODW-MRW (U.S. District Court for the Central District of California Filed Jul. 6, 2011).

FDIC as Receiver of Michigan Heritage Bank v. Cuttle, Case No.2:11-cv-13422-BAF-MKM (U.S. District Court for the Eastern District of Michigan Filed Aug. 8, 2011).

FDIC as Receiver of The Columbian Bank and Trust Co. v. McCaffree, Case No. 2:11-cv-02447-JAR-KGS (U.S. District Court for the District of Kansas Filed Aug. 9, 2011).

FDIC as Receiver for Cooperative Bank v. Rippy, Case No. 7:11-cv-00165-BO (U.S. District Court for the Eastern District of North Carolina Filed Aug. 10, 2011).

FDIC as Receiver for First National Bank of Nevada v. Dorris, Case No. 11-cv-01652-GMS (U.S. District Court for the District of Arizona Filed Aug. 23, 2011).

FDIC as Receiver for Mutual Bank v. Mahajan, Case No: 1:11-cv-07590 (U.S. District Court for the Northern District of Illinois Filed Oct. 25, 2011).

FDIC as Receiver for Westsound Bank v. Johnson, Case No. 3:11-cv-05953-RBL (U.S. District Court for the Western District of Washington Filed Nov. 18, 2011).

FDIC as Receiver for Bank of Asheville v. Greenwood, Case No. 1:11-cv-00337-MR-DLH (U.S. District Court for the Western District of North Carolina Filed Dec. 29, 2011).

FDIC as Receiver for R-G Premier Bank of Puerto Rico v. Galán-Alvarez, Case No. 3:12-cv-01029-JAG (U.S. District Court for the District of Puerto Rico Filed Jan. 18, 2012).

The FDIC follows the policies adopted by the FDIC Board in 1992, ‘Statement Concerning the Responsibilities of Bank Directors and Officers,’ that can be found online at http://www.fdic.gov/regulations/laws/rules/5000-3300.html#fdic5000statementct.

NEWS - Banking & Finance

By Lou Phelps, SBJ Publisher

Jan 4, 2012 - A 35-year-old Savannah woman has been arrested after allegedly embezzling more than $17,000 from the company that employed her as a bookkeeper three years ago.

Heather Walker of the 4000 block of Ogeechee Road was arrested last Wednesday by Savannah-Chatham Metropolitan Police Financial Crimes detectives on charges of theft by taking, computer theft and four counts of financial transaction card fraud.

She had been employed by S&W Enterprise on West Bay Street between August 2008 and January 2009 when the manager inquired about unauthorized charges on a company credit card. Walker quit without notice the next workday, prompting an investigation.

Detective R.J. Woodberry’s investigation revealed she took cash from company deposits, forged payroll and petty cash checks to herself and made unauthorized charges on the company credit card, totaling $17,544.

Embezzlement Too Common at Small Businesses

While embezzlement does not take place at only small companies, the percentage of it occuring at smaller companies is much higher due to the need for individual staff members to perform multiple functions. 

There are a few fundamental steps that owners and managers can take to avoid it happening at their company.   

First, do not have the person writing checks and making deposits also be the one to open and balance bank statements.  It is critical that these functions be separated, even if it means that the owner/manager only opens the monthly bank statement and reviews all the checks, but does not do the balancing.  Look at all signatures on checks.  A great step is to require two signatures on a check over a specified amount. In this era of online bank statements, it is important to bank with an institution that either returns your paper checks or provides easy access to view the back of your checks.

Second, look at all vendors to whom your company issued checks.  One of classic methods of embezzling is to set up a fictitious vendor(s) in a company’s Accounts Payable system, and then write them checks. The embezzler simply creates a small business account as a sole proprieter using their social security number, and deposits the checks into their “small business” account…usually at a smaller community bank where there are sometimes less stringent practices.  They often write the checks for small amounts to not attract attention…but the drip, drip, drip adds up.  

Third, closely look at all credit card payments for bills and to vendors, as well.  Remember that the embezzler can also set up a PayPal account for their fictitious enterprise, and use your company credit or debit card to make these payments to themselves. 

Fourth, whomever IS balancing your bank statements should not be allowed to make General Ledger entries to balance the checkbook.  Do you know how to look at a list of General Ledger entries made by your bookkeeper?  This is their simplest way to bring the books into balance and cover their theft. 

Another way that embezzlers hit small businesses is by overpaying themselves payroll checks.  They’re your bookkeeper, handling your payroll.   One week, they pay themselves on Friday, occasionally they’ll pay themselves on Monday…and Friday…in the same week.  Or, they will increased their hours, hourly wage or base salary without your notice. With all the tax deductions, it’s easy to add $50.00 a week without you realizing - $2,500.00 a year.  Take the time to review the payroll occasionally….without prior notice.

If they are also paying your payroll taxes, and balancing your books, be careful that the taxes are actually being paid…not just entered into your checkbook.

Embezzlers start small…testing the waters to see if you notice anything, If not, they start to increase the methods they use and the amounts.  Many, many cases are reported annually where an embezzler has drained a company for years and years.

Remember that embezzling employees are brazen and sometimes subtle, but they seem like your most invaluable employee.  And, often, you’re not the first company they stole from.  When they start to get questioned at one company, they resign and move on to the next.   

Theft of more than $299.00 is a felony.

NEWS - Banking & Finance

SBJ Staff Report

Jan 3, 2012 - First Citizens bank has announced that Janice Woods has joined the company as Senior Vice President and Retail Sales Manager, and Anne-Marie Jones has joined the company as Relationship Manager. Woods and Jones are based at First Citizens’ Savannah branch, located at 13 E. York St.

As Retail Sales Manager, Woods will be responsible for leading First Citizens’ consumer and business banking efforts in Savannah. This includes selling bank products that meet customers’ needs, developing action plans that address local market opportunities and representing First Citizens in the local community. As Relationship Manager, Jones will be responsible for serving retail and small business customers.

A 29-year banking veteran, Woods joins First Citizens from First Chatham Bank, where she most recently served as Senior Vice President of retail banking. Prior to her role with First Chatham Bank, Woods served in a variety of retail banking roles during her 19-year tenure at Bank of America. Woods received her bachelor’s degree in business administration from Georgia Southern University in Statesboro.

Jones brings to First Citizens 10 years of experience in Savannah’s banking industry, specifically in the areas of retail banking, commercial banking and mortgage lending. A native of Columbia, S.C., Jones received her bachelor’s and master’s degrees from the University of South Carolina in Columbia.

“I am excited to welcome Janice and Anne-Marie as the newest members of our Savannah team,” said Kelly Meyer, Retail Market Executive for First Citizens’ Atlanta Metro Division. “Both Janice and Anne-Marie are deeply engrained in the local community, and their banking knowledge and experience will be a valuable asset as we grow our presence in Chatham County.”

First Citizens Bancorporation, Inc., is the parent company of First Citizens Bank and Trust Company, Inc. First Citizens Bank offers services in commercial and retail banking through its more than 190 offices in South Carolina and Georgia. As of September 30, 2011, First Citizens Bancorporation, Inc. had total consolidated assets of $8.25 billion. For more information, visit the First Citizens website at www.firstcitizensonline.com.

NEWS - Banking & Finance

By Catherine West Olivetti, Esq, SBJ Special Report

Dec 19, 2011 - As the New Year approaches, one thing is certain – this isn’t your parents’ economy. As news headlines throughout 2011 demonstrated over and over, endless recessions, high unemployment, a foreclosure glut and a bottomed-out real estate market have become the status quo.

Today’s “new normal” is tougher, grittier and more challenging than ever. That’s why Americans require new strategies to succeed in this new economy. The old tried-and-true financial advice simply doesn’t apply any more. The new normal requires new strategies.

As we look ahead to 2012, here are 10 tips to help navigate the economy in the New Year:

- Face up to debt. Don’t just kick the can down the road and defer your day of reckoning. Take a hard look at your credit card debt, mortgage and budget and study the big picture. An overwhelming number of Americans are in hot financial water, with their homes providing a major source of financial strain. Only when you confront the reality of your individual situation will you begin to make positive changes. 

- Develop a strategic debt plan. It’s not always advisable to wipe out debt completely. Come up with a balanced strategy to reduce debt in 2012. Don’t deplete all your cash reserves or you may find yourself facing even tougher times down the road. The stakes have changed, as has the economic landscape. Declaring bankruptcy is not always the solution. There are many other options available in today’s economic climate. Remember that creditors are much more willing to negotiate on payment plans and interest rates than they were five years ago.

- Don’t assume things will get better any time soon. Plan for right now, when the economy is at its worst, and you’ll be able to succeed when it improves. The reality is that no one knows exactly when the economy will improve. The key is to ride out the rough years successfully and with as little collateral damage as possible.

- Don’t let your mortgage bring you down. If your house is underwater and you can’t pay your mortgage, talk to your Realtor about short sale options. It remains to be seen when the U.S. real estate market will hit bottom, but that doesn’t really matter if you need to sell now. If you do need to sell your home, be realistic about your price and remain open to any and all offers.  

- Live within your means. The days of draining a line of credit to finance spending sprees are over. It’s much better to “live low on the hog,” which means creating a budget, reducing expenses and being sensitive to your financial limits. Pay attention to how you spend money and learn to differentiate between the things you want versus the things you need. I often tell my clients, “I don’t care how you spend your money – I want youto care about how you spend your money.”

- Save as much as possible. Even though it’s difficult, hold on to every penny of income and cash you possibly can. The reality is that we are experiencing an economy where every dollar matters and where cash is king.

- Don’t take money from your retirement accounts to finance debt. As our nation’s population ages, it’s even more important for Americans to prepare for retirement through smart planning and strategic savings. A growing number of homeowners are eroding their 401(k) and SEP accounts to finance debt, which is a major mistake. When you put money away for retirement, it needs to be completely hands-off.

- Plan for unemployment. The conventional wisdom has always been to have six months of emergency money to support your family and yourself in the event of a hardship, like a job loss. The reality is that it takes longer to find a job than many people realize, so a six-month emergency fund, in 2012, really needs to be a 12-month emergency fund.

- Be smart about college education. Don’t mortgage your own future for your children’s college education. We’re in the middle of an unprecedented financial crunch, so make well-informed, affordable choices for your children when it comes to college. Don’t let your kids graduate  from a pricey university with crushing debt or compromise your own retirement account to send your child to a private college you can’t afford. The best gift you can give your kids is to be debt-free upon graduation.

- Don’t be afraid to ask for help. There is so much shame surrounding debt, which is truly unnecessary. Getting out of debt requires a sound strategy and smart advice. There is no one-size-fits-all solution that works for everyone. Get help from experts who can help you make the hard decisions. Whether you speak with a financial counselor, an experienced lawyer or a trusted leader at your church, don’t be afraid to talk about debt, particularly when there is so much help available.

- The U.S. housing market is not expected to rebound any time soon, and the nation’s economic recovery is taking much longer than many experts originally predicted. The key to succeeding in today’s “new normal” is to be your own best advocate, to take responsibility for your financial decisions and to develop your own course of action.

Editor’s Note: Catherine West Olivetti is a loss mitigation attorney based on Hilton Head Island, S.C. She can be reached at (843) 341-9260.    

NEWS - Banking & Finance

By Lou Phelps

Dec 21, 2011 – The Office of the Inspector General released its report today on what the taxpayers have ultimately lost by the failure of Atlantic Southern Bank of Macon, which was closed back on May 20, 2011. The bank had a branch on Hodgson Memorial Parkway, and was writing loans in the Savannah and Coastal Georgia region. 

When a bank fails, the work behind the scenes by the Georgia Department of Banking and Finance (GDBF) and other state and federal banking and law enforcement entities just begin.   

Banking regulators begin the process of pouring through banking documents to determine whether poor banking practices by the banking company’s leadership and its board of directors are to blame for the failure, or whether there are other illegal activities at play.

It is sometimes a process that takes as long as two years before final decisions are reached, or legal charges are brought. Often, the FDIC seeks to recover losses from the bank’s leadership and board members for incompetence when the government – the taxpayers – have suffered a financial loss at an FDIC-insured institution.

And, the federal governement’s Inspector General has also been in the process of reviewing the job that the FDIC bank regulators have done over the past few years in managing U.S. banks – trying to determine why so many failures have incurred. 

Senator Saxby Chamblis (R-GA) announced today that he is co-sponsoring a bill to look into why so many banks failed in the U.S.  In part, he is asking whether the bank regulation processes and methodologies have caused some of the failures.

The OIG’s Report on Atlantic Southern Bank

On June 17, 2011, the FDIC notified the Office of Inspector General (OIG) that ASB’s total assets at closing were $726 million and the estimated loss to the Deposit Insurance Fund (DIF) was $273.5 million. 

The OIG then conducted a material loss review of the failure of Atlantic Southern Bank to determine the causes of the bank’s failure, and to also evaluate the FDIC’s supervision of the bank – was the FDIC doing an adequate job of overseeing the bank leading up to the failure?

Atlantic Southern Bank was established in December 2001 as a state nonmember institution called New Southern Bank.  In 2005, the bank changed its name to ASB.  The bank was wholly owned by the Atlantic Southern Financial Group, Inc., a publicly-traded, one-bank holding company.  As of June 2010, ASB’s directors owned or controlled 19.5 percent of the holding company’s outstanding stock, with the remainder of the stock widely held.   The only local board member was Donald L. Moore Jr., president of Donald L. Moore, Inc., a commercial contracting firm with headquarters in Savannah since 1973, who also served on the Audit Committee of Atlantic Southern Financial Group, the holding company.

In 2006 and 2007, ASB expanded its geographic presence in central and southern Georgia to the growing markets of coastal Georgia and northern Florida.  The bank’s expansion was facilitated by the acquisition of three institutions:  Sapelo National Bank (with total assets of $64 million), First Community Bank of Georgia (with total assets of $70 million), and CenterState Bank Mid Florida (with total assets of $100 million). 

ASB’s lending strategy focused on acquisition, development, and construction (ADC) and other commercial real estate (CRE) projects.  At the time of its closure, ASB operated a main office in Macon, Georgia, and 15 branches in central, southern, and coastal Georgia.  The bank also operated one branch in Jacksonville, Florida. 

The Causes of the Failure and Material Loss

In the Office of the Inspector General (OIG) report today, they found that the bank failed primarily because its Board of Directors (Board) and management did not effectively manage the risks associated with the institution’s aggressive growth and heavy concentration in commercial real estate loans, particularly construction loans.

 “Notably, ASB (Atlantic Southern Bank) did not maintain capital at levels that were commensurate with the increasing risk in its loan portfolio, reducing the institution’s ability to absorb losses due to unforeseen circumstances.  Lax oversight of the lending function also contributed to the asset quality problems that developed when economic conditions in ASB’s lending markets deteriorated.  Specifically, the bank exhibited weak ADC (commercial) loan underwriting, credit administration, and related monitoring practices.  Further, ASB relied on non-core funding sources, especially brokered deposits, to support its lending activities and maintain adequate liquidity.  These funding sources became restricted when ASB’s credit risk profile deteriorated, straining the institution’s liquidity position,” the OIG states.

Specific Allegations of Poor Management

The OIG’s report lists a number of specific poor practices by the management and/or board, including:

- The bank’s leadership and board failed to do sufficient loan underwriting review of more complex deals.

- Examiners noted instances in which management’s use of interest reserves was not acceptable.  Specifically, examiners identified loans referred to as “working capital” loans or “investment” lines of credit that were used to pay interest on other loans, but were not properly identified as interest reserves.  Examiners also noted that ASB had established interest reserves for some loans that were no longer (or never were) in the development or construction phase.

- Examiners noted instances in which loans were renewed after a significant change in the real estate market, but evaluations or appraisals had not been obtained.

- Examiners reported three lending relationships that exceeded these limitations, two of which were cited at more than one examination by the FDIC.

- At the 2006 and 2009 examinations, examiners identified several loans that collectively exceeded these regulatory guidelines for loan limits to capitalization.

- The February 2010 examination and August 2010 visitation reports stated that ASB’s ‘ALLL’ was underfunded by $15 million and $102,000, respectivel.

No recommendations on penalties or ability to recover the losses were issued by the OIG’s office. They state that their role was to conduct the study.

The report acknowledges that the board’s bank, starting back in November 2008, adopted plans to address concerns identified during the examiners November 2008 visitation.  And, it appears to find the FDIC’s management to be sufficient.

And, the OIG goes on to say that “The perspectives gained from the failure of ASB are not unique.  Like many other institutions that failed in recent years, ASB developed a significant exposure to commercial and real estate loans at a time when the bank’s financial condition and lending markets were generally favorable.” 

NEWS - Banking & Finance

By Lou Phelps, SBJ Staff

Nov 28, 2011 – In October, CoastalStates Bank, founded and headquartered on Hilton Head Island, agreed to a strongly worded FDIC Consent Order, made public last week.  The order is being managed by the FDIC’s Atlanta Regional Office.

The order calls for numerous changes to current bank methodologies, and has a number of short timelines with which the bank’s board of directors must comply.   

With the FDIC ‘Stipulation,’ the Bank has consented, without admitting or denying any

charges of unsafe or unsound banking practices relating to weaknesses in capital, asset quality,

management, and earnings, to the issuance of the Consent Order by the FDIC and South Carolina State Board that oversees banks.

The bank’s board of directors has agreed to increase its participation in the affairs of the bank that is led by Randy K, Dolyniuk and James S. MacLeod.

The bank is owned by CoastalSouth Bancshares, Inc , with Dolyniuk serving as Chairman and CEO of both entities.  Other bank board members include Ernst W. Bruderer, J. Simon Fraser, James H. Hodges, W. Lee McCollum, Larry W. Page, James N. Richardson, Jr. and Scott H. Richardson.

Dolyniuk has been a Hilton Head Island resident for more than 25 years and is one of the bank’s founders, and has served as the bank’s chief executive officer since 2004. In 2007, the bank acquired Homeowners Mortgage.  He is the former Chairman of the Beaufort County Development Board.

James S. MacLeod is CoastalState’s president and is also one of the bank’s founders.  He currently serves as the president and CEO of the bank, and as the Senior Managing Director and CE) of Homeowners Mortgage since its acquisition in 2007.  Mr. MacLeod previously served as Executive Vice President of Mortgage Guaranty Insurance Corporation (MGIC) in Milwaukee, Wisconsin.

The FDIC order includes language that appears to question the current management team, seeks an organizational chart, and asks for review of the number of bank officers and their role in the banking company.  The order gives the board 60 days to analyze management’s performance, and make recommendations.

“Within 60 days from the effective date of this ORDER, the Bank shall have and retain qualified management with the qualifications and experience commensurate with assigned duties and responsibilities at the Bank,” including at CEO “with proven ability in managing a bank of comparable size and in effectively implementing lending, investment and operating policies in accordance with safe and sound banking practices; a chief credit officer/senior lending officer with a significant amount of appropriate lending, collection, and loan supervision experience, and experience in upgrading a low quality loan portfolio; and a chief operating officer with a significant amount of appropriate experience in managing the operations of a bank of similar size and complexity in accordance with sound banking practices,” it states.

And the FDIC only gives CoastalStates Bank 90 days to improve its Tier 1 Capital to equal or exceed 8 percent of its total assets, and shall have Total Risk-Based Capital in such an amount as to equal or exceed 10 percent of the Bank's total riskweighted assets. 

Within 30 days, the Bank has agreed to develop an internal loan review and grading system to provide for the periodic review of the Bank's loan portfolio in order to identify and categorize the Bank's loans; and within 60 days to implement a written, comprehensive budget in order to improve the bank’s profit.

Dolyniuk is also a founder and director of Nexity Financial Corporation and Nexity Bank, a private company, where he serves as chairman of the Directors’ Loan Committee and as a member of the Executive Compensation Committee and Corporate Governance and Nominating Committee and has served on the Audit Committee. 

He served as director of First National Bank for several years, and has thirty years of banking experience.

NEWS - Banking & Finance

SBJ Staff Report

Nov 7, 2011 – Media General, owner of WSAV-TV in Savannah, reported a net loss of $30 million in the third quarter ending Sept. 30, 2011, on Friday, which brings the company to $71 million loss for the first nine months of 2011.

The results included a non-cash goodwill impairment charge. The weakening economic recovery combined with the market’s perception of the value of media company stocks led the Company to perform a third-quarter goodwill impairment test. The company took a $26.6 million pretax non-cash goodwill impairment charge – a write down in the company’s total assets - related to certain print properties in the Virginia/Tennessee market.

Excluding the impairment charge, the Company’s net loss was only $14 million for the third quarter; this compares to a net loss of $11 million in the same quarter last year.

The driving factor behind the reduction in year-over-year performance was an 11% and 8.1% decline in revenues in the third quarter and first nine months from the equivalent 2010 periods. As the economic recovery has faltered this year, weakness at the company’s print advertising properties has continued. Additionally, significantly reduced political advertising in this odd-numbered year has contributed to the company’s overall revenue shortfall versus last year.

In a concerted effort to mitigate the revenue weakness, discretionary spending was reduced and is being held to a minimum as evidenced by an 8.4% quarter-over-quarter decrease in operating costs (excluding impairment) in the third quarter of 2011. Additionally, aggressive expense management led to a 2.6% decrease in operating costs (excluding impairment) in the first nine months of 2011 over the equivalent prior-year period despite a $1.3 million year-over-year increase in severance expense. The company has also required all employees to take 15 days off unpaid between July and December to cut expenses.