NEWS - Banking & Finance

By Ted Carter

Georgia piled up the “zero” star ratings in Bauer Financial’s recently released second quarter ratings, including two area banks – Darby Bank and Citizens Bank of Effingham.

The dismal ratings handed to 61 Georgia banks came just after the FDIC shut down three more banks in the Peace State on Friday.

In a Sept. 17 announcement, the FDIC said Community & Southern Bank of Carrollton acquired the banking operations, including all the deposits, of three Georgia-based institutions. The Bank of Ellijay, Ellijay; First Commerce Community Bank, Douglasville; and The Peoples Bank, Winder. The closings brought to 15 the number of Georgia financial institutions foreclosed on by the FDIC since the start of the year,

The Bank of Ellijay, First Commerce Community Bank and The Peoples Bank had received zero ratings from Bauer Financial, a Coral Gables-Fla. based rating agency for financial institutions. Bauer emphasizes in its ratings reports that the zero rating does not mean a bank is in imminent danger of an FDIC takeover but it does indicate a poor performance in the last quarter and possible difficulties with regulators and a need for raising new capital.

For its part, Bauer says the zero denotes the institution is facing “considerable challenges at this time.”

Florida also fared poorly in the ratings, with the agency giving zero grades to 41 banks.

The Coral Gables, Fla.-based bank rating agency grades financial institutions on a range of zero to five stars, with five being a designation of excellent health.

Zero-rated Darby Bank, based in Vidalia since 1934 and with branches in Savannah and Pooler, reported second quarter assets of $689,736,000, down from asserts of $900,697,000 at the close of the second quarter last year.

Its FDIC second quarter filing, Darby reported that 10.05 percent of its loans and leases of $423,037,000 were no-current. Darby reported 4.68 percent of its loans were non-current at the end of the second quarter last year.

Darby’s Tier One capital is down to $12.9 million from $37.7 million at the end of the second quarter 2009. The FDIC filing listed a Q2 Tier One capital ratio of 1.88 percent. That ratio stood at 4.19 percent at the close of Q2 in 2009.

Tier One represents a bank's core capital and includes only equity capital and disclosed reserves. The Tier One ratio is calculated by dividing a bank’s Tier one capital by its total risk-weighted assets, which are a bank’s assets weighted according to credit risk.

Darby is a non-member Federal Reserve bank regulated by the FDIC

Zero-rated Citizens Bank of Effingham reported assets of $232,318,000 at the close of Q2. The Springfield-based bank reported loans and leases of $168,674,000, of which the bank listed $25.6 million as non-current.

Citizens Bank of Effingham reported a total of 11.04 percent of its loans were non-current in the second quarter. That compares to 0.17 percent of loans reported as non-current at the end of the second quarter of 2009.

The bank, a non-Federal Reserve member bank regulated by the FDIC, reported it has restructured 1.03 percent of its loans and leases. The bank has been in operation since 1998 and has one office and branches in Effingham County.

The Bank of Newington in Screven County also received a zero grade from Bauer, as did Oglethorpe Bank in Brunswick.

Bauer gave a two-star grade to several banks in the Coastal Georgia region. Under a two-star designation, Bauer deems a bank “problematic.” Receiving two-star designations were First Chatham, Savannah; Carver State Bank, Savannah; First Southern National Bank, Statesboro; Peoples Bank, Lyons; Farmers and Merchants Bank, Statesboro; and Southern Bank, Sardis.