Freedom Bank of Georgia based in Commerce with branches in Jefferson, Winder and Homer became the 17th bank taken over so far in 2009 by the FDIC. Freedom Bank was taken over Friday evening at 6 p.m. by state and federal banking officials. All deposits of the bank were acquired by Northeast Georgia Bank of Lavonia and all branches will reopen Monday under that bank's name.
“Depositors of Freedom Bank of Georgia will automatically become depositors of Northeast Georgia Bank,” said a news release about the closure. “Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until Northeast Georgia Bank can fully integrate the deposit records of Freedom Bank of Georgia.
“Over the weekend, depositors of Freedom Bank of Georgia 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.”
Customers who have questions about Friday's transaction can call the FDIC toll-free at 1-866-782-1897. The phone number will be operational on Saturday from 9:00 a.m. to 6:00 p.m., EST; on Sunday from noon to 6:00 p.m., EDT; and thereafter from 8:00 a.m. to 8:00 p.m., EDT.
Freedom Bank is the second bank in Georgia seized by the FDIC this year. It is the seventh — and smallest — taken over since August 2008 when bank failures begin to rise due to the economic downturn. It is the only bank seized in Jackson County so far in the wake of the housing bust, which has devastated the area’s real estate and construction market.
In December, Freedom Bank was issued a cease and desist order by regulators, which instructed the bank to take certain actions to shore up its financial standing. At the end of the third quarter in 2008, the bank had 11 percent of its loan portfolio, $12 million, in default according to the FDIC. The bank lost $8.5 million in 2008 according to FDIC reports.
According to the FDIC’s news release, the bank had total assets of around $173 million and deposits of $161 million as of March 4. Northeast Georgia Bank agreed to purchase $167 million in assets at a discount of $13.6 million.
The FDIC estimates that the cost to the Deposit Insurance Fund will be $36.2 million. Northeast Georgia Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's Deposit Insurance Fund compared to alternatives.