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Banks will make news again in ’08

POSTED: January 20, 2008 5:04 a.m.

A number of the major business stories for 2007 in Hall County will likely carry forward into 2008.

The merger of GB&T Bancshares of Gainesville and Atlanta-based SunTrust is expected to be completed in 2008.

SunTrust announced in November that it was acquiring GB&T, parent company of Gainesville Bank & Trust and six other community banks in North and Central Georgia.

The news came after a tumultuous year for GB&T. An FDIC examination in December 2006 revealed a number of fraudulent loans at the company’s bank in Villa Rica. That news, coupled with nationwide problems in the banking and mortgage industry, sent the publicly traded GB&T stock into a nosedive.

The third quarter results for GB&T showed a loss of $6.3 million for the quarter, however, for the year the bank managed a profit of $515,000 through the first three quarters.

"It is all related to the slowdown in the housing market," Richard Hunt, chief executive of GB&T Bancshares, said in November. "In all of my years in banking, I’ve never seen the housing market come to a screeching halt like it did this summer. With the concentration all of our banks have in construction and development loans, we’ve got builders who cannot sell houses and are having trouble paying back loans."

Loan problems at two of the company’s banks in West Georgia accounted for 70 percent of the nonperforming assets of the entire seven bank company. Nonperforming assets are loans that are more than 90 days past due and real estate that has been foreclosed on by the bank.

In quarterly reports to the Federal Deposit Insurance Corp. on Sept. 30, the two banks, HomeTown Bank of Villa Rica and Community Trust Bank of Hiram, had the holding company’s largest percentage of nonperforming assets and loans more than 30 days past due.

HomeTown Bank has $36 million of its $191 million loan portfolio listed as nonperforming, or 18.89 percent. Community Trust’s nonperforming assets were $26.2 million, or 9.71 percent of the bank’s $270 million loan portfolio.

Hunt said the two banks do a good portion of their business in Paulding County, where problems in the housing market reached a difficult point in third quarter.

In 2008, the fourth quarter results of banks, including those owned by GB&T, is likely to show a continuation of losses stemming from the troubled housing market.

SunTrust has downgraded its fourth quarter predictions because of deterioration in market values, the outlook on consumer credit quality and other related items, a Securities and Exchange Commission filing shows.

The SunTrust acquisition is expected to be completed in the second quarter of 2008, however, the conversion of GB&T banks into SunTrust sites is not expected to be completed until the third quarter, bank officials have said.

But 2008 will also bring new players into the Hall County banking market.

Business and civic leader James A. "Jim" Walters chairs a group of organizers planning to form Chattahoochee Bank of Georgia.

Walters is a former director of First National Bancorp, which was acquired in the mid-1990s by Regions Bank.

He is joined in the venture by Jody Lail, a former SunTrust executive.

Pending state and federal approval, the new bank expects to begin a stock offering in early 2008 and will be open for business at midyear.

In the final days of 2007, organization of another financial institution in was announced. Home Federal Bank, a thrift institution, will take the name once used by one of the county’s longtime savings and loan associations.

If federal approval is given, the thrift will begin offering stock sales in January and will open in the summer.



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