Banking & Finance

NEWS - Banking & Finance

By Lou Phelps
SBJ Staff

Ever wonder how much money is deposited in Savannah area banks?  The answer is more than $11 billion as June 30, 2010.  Wonder how many banks are in business in our region?  The answer is 52, and that’s without counting all the credit unions and mortgage-only financial institutions and options.

But which bank or bank holding company has the largest marketshare of local deposits of the banks that operate in the twelve counties that make up the Coastal Georgia and Lowcountry area?  And, who’s growing, or appears to be in deep financial trouble?

Across the state of Georgia, the three largest banks - based on total assets and including only banks that were chartered in Georgia - are SunTrust Bank, United Community Bank and Synovus Bank. All three have branches in the greater Savannah area.

In South Carolina, the three largest banks, based on total assets and that there were chartered in that state, are Carolina First Bank, First Citizens Bank and Trust Company, Inc. of Columbia, SC. Carolina First and First Citizens both operate in Beaufort and/or Jasper counties, but not Trust Company, Inc.

Based on The Savannah Business Journal’s research for its annual “Book of Lists:Areas Largest Banks 2010,” (see page 15)  there was a significant change in market position among the top three banks in local deposits.

Bank of America dropped to third behind SunTrust Bank, with Wachovia/Wells Fargo holding on to the top position once again with more than $1.558 billion in deposits here.
SunTrust Bank now has $1.4 billion in deposits in the local region, with Bank of America dropping down to $1.295 billion in the 12 counties that make up the region. SunTrust is not without its troubles, reporting a loss of (-$185.9) million YTD as of June 30.

But, SunTrust’s numbers are actually improving, according to analysts. For the bank’s second quarter of April through June, SunTrust reported a $56 million loss versus a $229 million loss in the same quarter last year as the write downs for bad loans decrease percentage-wise, and with an improvement in non-interest income.  Taxable revenues grew 13.7% in the second quarter.

SunTrust’s non-interest income was $592 million, up 36% from the prior quarter as all service and fee-based revenues escalated, but overall income declined 11% year over year, mainly due to a fall in mortgage-related income, a dilemma all banks are facing.  Without writing mortgages, they’re not earning interest or income from selling off local mortgages.

The Top Banks
Savannah Bancorp’s The Savannah Bank has moved up significantly in local market share of deposits and is knocking at BB&T’s door for the position as the fourth largest bank in the region with the acquisition of First National Bank (FNB) on June 25, 2010.

The Savannah Bank acquired $252.5 million in assets and $231.9 million in local deposits from FNB, making The Savannah Bank now a “billon dollar bank,” based on total assets. The bank’s estimated total assets were $1,020 billion, with local deposits of $803 million, as of 6/30/2010.

John Helmken remains at the helm of Savannah Bancorp, the holding company for three banks: The Savannah Bank, Bryan Bank & Trust in Bryan County and Harbourside Community Bank in Beaufort County.

When all local deposits are added together for the three, Savannah Bancorp has a total of more than $1.70 billion, making it larger than BB&T in local market share.
Darby Bank showed growth in total deposits this year over 2009, but continues to struggle under a sea of bad real estate loans.  A new management team was brought in in 2009 to reverse troubling profitability numbers and work with the FDIC.

However, on Dec. 18, 2009, the FDIC issued a Darby a consent order. President Ray Fisher announced a three-year strategic plan to improve the bank’s performance, but numbers through the first two quarters of 2010 ending 6/30/2010 appear grave.

The bank has reported a (-$6.7) loss year to date due to provisions for bad loans.  Darby has more than $625 million in deposits in Toombs County, the leading bank in that area, which does not show on the BOL information on page 15.

The consolidate bank holding company Synovus, Inc. is also larger than BB&T in the region, with $ 1.192 billion in local deposits. Synovus includes Sea Island Bank, The Coastal Bank of Georgia and it’s South Carolina unit now know as NBSC/Synovus, formerly The National Bank of South Carolina. But each of the banks is presented separately on the Book of Lists, similar to Savannah Bancorp.

2010 Bank Closures
One can ‘t talk about banking in the current economy, without addressing the region’s three bank closures within the past three months.

One of the biggest surprises for those who don’t make their living as a banker, was the failure of First National Bank. The bank was founded by Hays McMath, a long-time bank executive and community leader, and the board of directors included some of Savannah’s most prominent citizens. The Savannah Bank paid a 10% premium to acquire the assets from the FDIC.

Also closed this year was Beach First National Bank, founded in Myrtle Beach, SC. in 1996, and closed by the FDIC on April 9, 2010. Its $580 million in assets were purchased by the Bank of North Carolina. It was a familiar story -  failing real estate loans.

Woodlands Bank, with eight offices in Savannah, Bluffton and Beaufort, was closed on Friday, July 16, by the Office of Thrift Supervision. Subsequently, the Federal Deposit Insurance Corporation (FDIC) was named Receiver.

All deposit accounts, excluding certain brokered deposits, were transferred to Bank of the Ozarks, Little Rock, AR.

As of March 31, 2010, Woodlands Bank had approximately $376.2 million in total assets and $355.3 million in total deposits.

New Bank CEO’s in the Region
In June, Tommy Bouchette was named market president of BNC – the Bank of North Carolina – to oversee the banking company’s efforts in South Carolina. BNC purchased the assets of the failed Beach First National Bank that had two offices in Hilton Head Island. Both branches on William Hilton Pkwy at Pineland Station and The Village at Wexford have remained open.

Bouchette was a founder of SunBank, and has most recently served as a key executive with South Carolina Bank and Trust which merged with SunBank back in 2005.

On July 28, 2010, Synovus, the Columbus, Georgia-based bank holding company, announced the promotion of Frederick L. Green to Vice Chairman of Synovus. Green formerly served as Chairman, President and CEO of Synovus affiliate National Bank of South Carolina (NBSC) for six years. He will remain as Chairman of the Board for NBSC. Richard E. Anthony, who was recently elected Synovus President and COO after holding the position of Vice Chairman for eight years.
Concurrently, Synovus announced the promotion of Charles “Chuck” Garnett to President and CEO at NBSC.

At First Chatham Bank, headquartered in Savannah, Mike Viers stepped down as president this year, and Brian Foster, chairman of the board, assumed the title of CEO, with William M. Austin, Jr. as the Chief Operating Officer. Austin has over 42 years experience in personnel and operations, with 32 years experience in Chatham County.
In general, there was stability this year in bank presidents.

The Worst Income Statements
What a difference a year makes.  Last year when the SBJ’s research was completed on the area’s largest banks, SunTrust Bank was showing $320 million in YTD income.   Now, as of June 30, 2010, the bank is showing a YTD loss of -$185.9 million. Reason?  The bank has had to take an $820.6 million dollar write down as a provision for bad debts and loans this year.

It’s a similar picture for others.  Carolina First Bank is reporting a ($ 78.9) million loss YTD due to a provision for bad or questionable loans of more than $ 95 million.  But the bank has more than $12 billion in total assets as of June 30, 2010.

The consolidated income statement for Synovus, Inc. also shows problems.  The bank holding company is made up of Sea Island Bank, The Coastal Bank of Georgia – one of the dominate banks in the Brunswick, GA. market – and the former National Bank of South Carolina, now called NBSC/Synovus.

While there are YTD losses for the two Coastal Georgia banking units, they pale in comparison to the (-$102.3) million loss that NBSC is reporting YTD June 30, 2010. 
Synovus announced a number of key changes in top leadership in July. (NBSC is not on the SBJ “Book of Lists” on page 15 Because it has only $97 million in deposits in the local market.)

Banks in the 12 Counties of Coastal GA and the Lowcountry*

Ameris Bank
Atlantic Bank & Trust
Atlantic Community Bank
Atlantic Coast Bank
Atlantic National Bank
Atlantic Southern Bank
Bank of America
Bank Meridian
Bank of Newington
BB&T
Bryan Bank & Trust (Savannah Bancorp.)
Capital City Bank & Trust
Carolina First
Carver State Bank
Citizens Bank of Bulloch County
Citizens Bank of Effingham
Citizens State Bank
Coastal Bank of Georgia (Synovus)
Coastal States Bank
Colony Bank
Darby Bank & Trust Co.
Farmers & Merchants Bank
First Bank of Coastal Georgia
First National Bank of Nassau County
First Southern National Bank
First Chatham Bank
First Citizens Bank & Trust
First Federal Savings & Loan
First Georgia Banking Co.
First Southern National Bank
Georgia Bank & Trust Company
Glennville Bank
Harbourside Community Bank (Savannah Bancorp.)
Heritage Bank of the South
Liberty Savings Bank
Lowcountry National Bank
NBSC (Synovus)
Oglethorpe Bank
Park Avenue Bank
Palmetto State Bank
Queensborough National Bank & Trust Co.
Region’s Bank
Sea Island Bank (Synovus)
South Carolina Bank & Trust
South Georgia Bank??
Southeastern Bank
SunTrust Bank
The Coastal Bank
The Heritage Bank
The Savannah Bank (Savannah Bancorp.)
United Community Bank
Wells Fargo/Wachovia

* The Savannah Business Journal defines Coastal Georgia and the Lowcountry as Chatham, Effingham, Bryan, Bulloch, Screven, Liberty, Long, McIntosh, Glynn, Camden, Beaufort and Jasper counties based on a combination of the State of Georgia regional divisions and national economic definitions of the Savannah metro area.

NEWS - Banking & Finance

The sad news on the closing of First National Bank by the FDIC created opportunity for another local bank, The Savannah Bancorp, Inc. (Nasdaq:SAVB).

In June the bank holding company completed its public offering of 1,263,157 shares of common stock at $9.50 per share. The Company received net proceeds of approximately $11.3 million after deducting underwriting discounts and expenses.

The net proceeds will be used for working capital and general corporate purposes, including to fund an earn-out payment in regard to the bank’s 2007 acquisition of Minis & Co., Inc., to support organic growth and “potential future acquisitions of branches or whole banks in or adjacent to our existing footprint, which may include the possible acquisition of failed institutions in FDIC-assisted transactions and to provide additional capital to the Banks,” the bank said in an SEC filing just weeks before the news that the bank had purchased the assets of First National.

“Raising capital is always gratifying as shareholders are showing their confidence in our Company.  We are particularly pleased with the strong participation by our insiders and existing shareholders.  The success of this offering, which was significantly over-subscribed, speaks to the Board of Directors and management’s historical stewardship of our capital and the Company’s opportunities,” said John Helmken II, President and CEO.

The Savannah Bancorp, Inc. is the bank holding company for The Savannah Bank, N.A., Bryan Bank & Trust (Richmond Hill, Georgia), and Minis & Co., Inc., and is headquartered in Savannah. SAVB has ten branches in Coastal Georgia and South Carolina.

NEWS - Banking & Finance

Kimberly “Kim” Kord, a Hilton Head Island resident, recently joined CoastalStates Bank as a senior commercial loan executive. Her responsibilities include the generation of commercial loans, deposits and a variety of other banking products and services, according to Randy K. Dolyniuk, chairman and chief executive officer of CoastalStates Bank.

A graduate of Indiana University with a bachelor of science degree in finance, she has more than 25 years of experience in various positions in banking and commercial lending.

Before relocating to Hilton Head Island, Kord was employed at National City Bank of Indiana where she worked in the commercial banking sector serving manufacturers, wholesalers, distributors and contractors as an executive vice president and division manager.

NEWS - Banking & Finance

In January 2010, one of Savannah’s city bank presidents, David T. Davis jumped over to “the other side” of the banking industy, leaving Colony Bank to join the FDIC in the Savannah area as Corporate Manager, Asset Management.

Davis led Colony Bank in the Coastal Georgia area as Market President from February 2008 until May 2009, and is well known in Georgia banking circles.
At Colony Bank, he is credited with increasing the bank’s commercial loan portfolio 26% in 2008, and increased the number of core DDA accounts 28% in the first quarter of 2009.

He is the former President/CEO and Founding Director of Landmark Bank of Savannah, From June 2006 through October 2007, he led a group of 22 investors to organize and charter a denovo bank in Savannah, including managed and directing the entire process of developing the proposed Bank’s Charter application, and raised $7.5 million dollars in organizer within commitments in 30 days.

He also held management positions at Region’s Bank and was with Wachovia Bank in the Savannah area for a number of years.

NEWS - Banking & Finance

SBJ Staff Report

July 16, 2010 - Woodlands Bank, headquartered in Bluffton, with offices in Savannah, was closed today by the Office of Thrift Supervision. The Federal Deposit Insurance Corporation (FDIC) was appointed as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Bank of the Ozarks, Little Rock, Arkansas, to assume all of the deposits of Woodlands Bank, it was announced.

The eight branches of Woodlands Bank will reopen on Monday as branches of Bank of the Ozarks. Depositors of Woodlands Bank will automatically become depositors of Bank of the Ozarks. Deposits will continue to be insured by the FDIC. There is no need for customers to change their banking relationship in order to retain their deposit insurance coverage, according to the FDIC and Woodlands’ customers may continue to use their existing branch until they receive notice from Bank of the Ozarks that it has completed systems changes to allow other Bank of the Ozarks branches to process their accounts, as well.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $115.0 million. Compared to other alternatives, Bank of the Ozarks's acquisition was the "least costly" resolution for the FDIC's DIF. Woodlands Bank is the 91st FDIC-insured institution to fail in the nation this year, and the second in South Carolina. The last FDIC-insured institution closed in South Carolina was Beach First National Bank, Myrtle Beach, on April 9, 2010.

First National Bank of Savannah failed in June, with The Savannah Bank assuming its deposits, and paying a 10% premium of the bank’s assets.

Friday evening and over the weekend, depositors of Woodlands Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual, the FDIC stated.

As of March 31, 2010, Woodlands Bank had approximately $376.2 million in total assets and $355.3 million in total deposits. Bank of the Ozarks did not pay the FDIC a premium for the deposits of Woodlands Bank. In addition to assuming all of the deposits of the failed bank, Bank of the Ozarks agreed to purchase essentially all of the assets.

The FDIC and Bank of the Ozarks entered into a loss-share transaction on $288.7 million of Woodlands Bank's assets. Bank of the Ozarks will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers.

Customers who have questions about today's transaction can call the FDIC toll-free at 1-800-423-6395. The phone number will be operational this evening until 9:00 p.m., Eastern Daylight Time (EDT); on Saturday from 9:00 a.m. to 6:00 p.m., EDT; on Sunday from noon to 6:00 p.m., EDT; and thereafter from 8:00 a.m. to 8:00 p.m., EDT. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/woodlands.html.

NEWS - Banking & Finance

SBJ Staff Report

July 5, 2010 - Darron Burnette and Chad Wiggins were recently named executive vice presidents of Sea Island Bank, a division of Synovus Bank, and elected to the bank’s local board. Burnette will continue leading the operations and retail banking divisions, while Wiggins’ responsibilities have been expanded to include leading both credit and commercial banking for the Statesboro market.

“What a tremendous asset to have these two experienced, energetic and capable professionals guiding our retail and commercial banking teams,” said Bruce Yawn, chairman of Sea Island Bank’s local board of directors. “We are exiting this difficult credit cycle in an extremely strong position and are poised for meaningful growth in our region.”

Burnette, who joined Sea Island Bank in 2002, has more than 28 years of banking experience. A GSU graduate, he is involved in the Georgia Bankers Association (GBA) and serves as an instructor for the organization's Georgia Banking School. He is also a past president of Leadership GBA, the Statesboro Kiwanis Club, Leadership Bulloch and the Statesboro alumni chapter of Sigma Chi Fraternity.

He currently holds leadership positions with the Statesboro-Bulloch County Chamber of Commerce, Keep Bulloch Beautiful, the Advisory Council of the Georgia Small Business Development Center, Georgia Southern Athletic Foundation, Georgia Southern Performing Arts Council and the Coastal Georgia Alzheimer’s Association. In 2008, Burnette was honored with a Deen Day Smith Service to Mankind Award. He and his wife, Kim, who is a teacher at Bulloch Academy, have two daughters, Courtney and Caroline. The Burnette’s are members of First Baptist Church of Statesboro.

A native of Statesboro, Wiggins joined Sea Island Bank in 1997, also a GSU graduate with a BBA degree in finance. He is an alumnus of Leadership Bulloch and has been actively involved in numerous civic, church and local school activities.. A member of the Rotary Club of Downtown Statesboro, Wiggins currently serves on the board of the Bulloch County Foundation for Public Schools and the Connections Ministries of Statesboro.

“Darron and Chad have shown outstanding leadership during this challenging banking period,” added D. Wayne Akins, Jr., president and CEO of Sea Island Bank, a division of Synovus Bank. “It is a tremendous privilege to acknowledge their hard work and dedication with these promotions. The operations, retail and commercial teams they lead are primed with knowledgeable, skilled team members.”

Sea Island Bank is a division of Synovus Bank, operates10 branches in Savannah, Statesboro and Metter and Savannah.

NEWS - Banking & Finance

SBJ Staff Report

July 5, 2010 - Part of the Federal overhaul of the banking system included provisions that eliminate consumer debit card overdraft fees, known as “Reg-E Opt In” in banking circles.

The new FDIC rule now enables consumers to limit the costs of overdraft services by providing consumers a choice regarding their institution’s payment of overdrafts for ATM and one-time debit card transactions. Consumers must also be provided a clear disclosure of the fees and terms associated with the institution’s overdraft service.

If you have a debit card issued by your bank, to use at an ATM machine, you must be asked to “opt in,” or affirmatively consent to the institution’s overdraft service for ATM and one-time debit card transactions, before overdraft fees may be assessed on the account.

The final rule also prohibits financial institutions from tying the payment of overdrafts for checks to opting into the overdraft service for ATM and one-time debit card transactions, a significant change.

But some area banks will not allow you to overdraft at the ATM machine.  That’s the decision of The Coastal Bank, according to Tom Wiley, chairman, president and CEO of The Coastal Bank.

In recent years, overdraft fees have turned into big business for the banking industry. In 2009, banks generated approximately $20 billion from overdraft fees on debit purchases and ATM transactions, plus an additional $12 billion by covering checks and recurring bills, according to Moebs Services, an economic research firm.

The Coastal Bank announced last week that it will eliminate overdraft fees for non-recurring electronic transactions on all consumer accounts once Reg-E mandatory compliance rules go into effect on July 1, 2010.

Regulation E prohibits financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions unless a consumer opts into an overdraft service for these electronic transactions. 

The Coastal Bank is the first local community bank to publicly elect not to participate in the Reg-E opt-in, according to Wiley.  Overdraft fees will still apply to overdrawn checks on consumer accounts and to all overdrawn transactions on business accounts at The Coastal Bank.

“For some time we have been wary of so-called ‘overdraft protection programs’ within the banking industry,” Wiley explained. “We felt it was just a matter of time before consumer watchdog groups would begin to shine a light on some of these strategies. As a result, we have not offered an official overdraft program at The Coastal Bank. We would rather eliminate the overdraft fees on consumer debit card transactions to simplify our customer’s banking relationship.”

The Coastal Bank plans to “opt-out” all of its customers automatically. In other words, customers who attempt to make purchases with their debit cards or withdraw money at an ATM without having enough money in their checking accounts will be declined, rather than charged overdraft fees. 

Wiley does not expect Reg-E to have a major effect on The Coastal Bank, which has full-service offices in Savannah, Pooler, Rincon and Hinesville.

“The largest impact Reg-E will have on The Coastal Bank will be coordinating our operational processes and disclosures to comply with the new regulation,” he explained.  “Since we did not offer overdraft programs in the past, we do not anticipate a material financial impact.”

NEWS - Banking & Finance

SBJ Staff Report

June 28, 2010 - United States Attorney Edward J. Tarver, based in Savannah, announced the results of the nationwide takedown, Operation Stolen Dreams, recently which targeted mortgage fraudsters in the Southern District of Georgia and throughout the country, and is the largest collective enforcement effort ever brought to bear in confronting mortgage fraud. The investigations are continuing.

The sweep was organized by President Obama’s interagency Financial Fraud Enforcement Task Force, which was established to lead an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  Starting on March 1, to date Operation Stolen Dreams has involved 1,215 criminal defendants nationwide, including 485 arrests, who are allegedly responsible for more than $2.3 billion in losses. Additionally, to date the operation has resulted in 191 civil enforcement actions which have resulted in the recovery of more than $147 million.

“Mortgage fraud ruins lives, destroys families and devastates whole communities, so attacking the problem from every possible direction is vital,” said Attorney General Holder. “We will use every tool available to investigate, prosecute, and prevent mortgage fraud, and we will not rest until anyone preying on vulnerable American homeowners is brought to justice.”

United States Attorney Tarver stated that investigating and prosecuting mortgage fraud is a top priority in the Southern District of Georgia.  Tarver praised the efforts of the FBI and the United States Secret Service and other federal, state and local law enforcement agencies throughout the District for their investigative efforts in uncovering these financial crimes.

Cases announced so far for the Greater Savannah area in Operation Stolen Dreams in the Southern District of Georgia include:

- United States vs. Marshall: On June 14, 2010, former UGA football star and NFL player Arthur J. Marshall, Jr. was sentenced to 69 months in prison and ordered to pay over $3.6 million in restitution for his mortgage fraud convictions.  Evidence presented during sentencing revealed that Marshall falsified sales contracts, personal finance records and other documents as part of his mortgage fraud scheme.  The victims of Marshall’s scheme included banks, a family who never got a property title from Marshall after paying him $100,000 for a home, and members of the American Legion.

- United States vs. Steptoe: On May 5, 2010, Brian and Natasha Steptoe pled guilty to mortgage fraud related charges, and are awaiting sentencing.  Evidence presented during their guilty pleas revealed that the Steptoes and others conned a handicapped, illiterate gentleman into signing a mortgage loan for a home he had no idea he was buying.  As part of their scheme, the Steptoes and others provided fabricated financial records on behalf of the unwitting straw buyer.  As a result of their fraudulent activity, the Steptoes and others pocketed large sums of money.  The property went into foreclosure soon after it was sold and remains on the market today.

The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.