FDIC issues ‘cease and desist’ order on CB&T

Posted by
Mike Buffington
Friday, June 26. 2009
Comments (26)
Due to problems stemming from bad loans made by the Barrow County branches of Community Bank & Trust, the federal FDIC released a “cease and desist order” against the firm Friday.

The order, dated May 11, 2009, slams the bank’s board of directors and management, saying “the Bank had engaged in unsafe or unsound banking practices and had committed violations of law and/or regulations.”

According to those close to the situation, the problems are a result of lax loan practices in Barrow County where the bank has offices in Winder, Bethlehem and Auburn.

The 29-page order lists a long series of activities the bank will now have to do, including raising additional capital, reclassifying bad loans, and strengthening board and management practices.

The bank, which has assets of $1 billion-plus, is based in Habersham County and has branches throughout Northeast Georgia, as well as a smaller number in West Georgia and East Alabama.
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#1 HF on 06/26/09 at 09:50 PM [Reply]
Community Bank abd Trust is a great hometown bank with some great folks and I beleive that they will get through this tough time and come out a winner!
#1.1 Tina Hayes on 06/27/09 at 08:58 PM [Reply]
Community Bank and Trust has been the best bank I have ever used, with some of the nicest people I have ever met. I have faith they will pull through this.
#1.1.1 Dawn Clayton on 06/28/09 at 06:03 PM [Reply]
All I can say is I hope things don't go like they did with Freedom Bank, Freedom had to be bought out by Northeast Georgia. I will cringe if I have to change over our accounts because I'm not sure if I trust any of the other banks in our area because I have been treated so well in the past by CB&T but not by anyone else. I would have loved having the mortgage I pay held by CB&T intead of my current lender, they are absolutely the worst! But one thing I find very interesting, why are we hearing about this NOW, almost 1 1/2 months later?!?
#1.1.1.1 Anonymous on 06/30/09 at 05:52 PM [Reply]
First, Freedom was not "bough out" as you state. If they had been, the FDIC would not have been named the receiver. Second, actions by the FDIC are only posted one time a month. It is possible this was not posted until June, when Mr. Buffington found the cease and desist order. Also, this is not just limited to Winder but the entire bank as a whole. Yes, I am sure Winder has it share of the problem loans. It can mean the bank will fail unless it complies with the order and meets the capital required to meet the regulators. Next, get use to this. It is very apparent the FDIC primarily believes there are to many banks in GA and has the desire to make changes. Our current administration is not helping matters also.
#2 Anonymous on 06/28/09 at 03:26 PM [Reply]
Alton Wingate is rolling over in his grave regarding this
news. He would be embarrassed by this development.
#2.1 Shareholder on 06/29/09 at 09:55 AM [Reply]
You are so correct, Alton was the leader of that bank and there was no succession for his untimely death. Collins and Trapnell love to point fingers at other banks and even their own Winder division, but the problems appear to be widespread within that organization. I hope the best for the shareholders.
#2.1.1 Anonymous on 06/29/09 at 06:09 PM [Reply]
Don't hate the players, hate the game.

It's time we all stopped being so damn greedy and started loving our neighbors.

Keeping up with the Joneses is for losers.
#2.1.2 Anonymous on 06/29/09 at 07:38 PM [Reply]
I work for Habersham Bank also based out of Habersham County. We are all going thru a tough time and I truly hope that we all survive this economy. I've always heard good things about CB&T and wish them all the best.
#2.1.3 WSL on 07/16/09 at 10:15 AM [Reply]
Quite the contrary, Alton had already gotten someone to succeed him before he became ill. However, he was pointed towards the door before Alton had been gone a week. Perhaps they should have remembered with much power came much responsibility.
#3 chris on 06/30/09 at 12:18 PM [Reply]
I do not know anything about this bank but

Freedom bank was Loaning money to people that

should not have been buying anything.

They had bad management
#3.1 BSMITH on 06/30/09 at 03:23 PM [Reply]
Good point Chris, sounds like unfortunately CB&T followed their footsteps.
#4 Commerce resident on 06/30/09 at 02:18 PM [Reply]
I'm a little confused - is CB&T, Commerce closing? I hope not!
#4.1 Mike Buffington on 06/30/09 at 02:25 PM [Reply]
No, a "cease and desist order" is not a takeover. Such an order outlines changes a bank has to make to stay strong.
#5 Gayle Gullick on 06/30/09 at 06:03 PM [Reply]
I love love love CB&T and wish them well
#6 Dale on 07/01/09 at 07:05 AM [Reply]
See the attached Reuters story:
http://www.forbes.com/feeds/afx/2009/06/29/afx6599559.html

Habersham Bank is under a Cease and Desist also. Unfortunately, it is a sign of the current economic conditions. Many banks are right now. Things will improve. No need to single out CB&T or Habersham Bank.
#6.1 Anonymous on 07/01/09 at 12:55 PM [Reply]
How exactly "will things improve"?

Notice I'm not asking "when", I'm asking "how".
#7 Anonymous on 07/01/09 at 01:32 PM [Reply]
Cb t is a great bank and will be fine
They did not receive any tarp funds and chose to make this all on their own
I know they will be fine
Customer
#7.1 BSMITH on 07/02/09 at 07:44 AM [Reply]
They were not elgible for TARP due to underlying asset problems and inadequate management.
#8 AB on 07/01/09 at 03:40 PM [Reply]
Developers and builders have left the local banks with millions of dollars in loans that they will never repay. As developers/builders file for bankruptcy protection ( NOT ALL OF THEM), the banks have been left only with the property that secured the loan. Property values have fallen and banks now own properties that are not worth the loan amounts. Blame that on the economy! If the banks are guilty of anything it would be lending too much to any ONE entity. They need to, and will, cut there losses and sell off the properties at a great price to buyers.
You Can Help!!!!
Go buy a foreclosed home and take advantage of the $8000 tax credits for 1st time home buyers. Buy a lot or property. Build a house on it; hold it for your kids or as an investment. You’ll make money on it in the long term. Its time to buy!!!
#8.1 Anonymous on 07/03/09 at 06:06 AM [Reply]
Fortunately, the local banks have the houses and land as collateral. So it's not a total loss. The banks (loan officers, loan committees, boards of directors, et al) share a great deal of responsibility in the current crisis).

Andy,

Are YOU buying foreclosed homes? Are you buying vacant lots or property? Are you building houses at the moment? Or are you just promoting these as a means to earn a commission on the sale of real estate?

I've heard cries of "foul" over the new appraisal rules the restrict contact between principals and appraisers. But, I always thought it was wrong for the appraiser to know the prospective sales price for the property they were appraising.
#9 customer on 07/02/09 at 02:40 PM [Reply]
I don't recall any smaller community type banks getting any tarp. It seemed to be only the larger banks, united community and sun trust and the like that got some tarp.
I am glad to see cb t working through without tarp
From the news media tarp may have strings attached to them.
Asset problems is why the larger banks received tarp.
I cannot speak to management issure in any of the banks,large or small.
#9.1 mc on 07/07/09 at 10:16 AM [Reply]
In order to recieve TARP Money you had to be publicly traded.
Smaller banks usually have a small number of investors
who shoulder the responsibility for defaults.

In addition to this you might notice that nearly every bank
which recieved tarp money, was approached by FDIC, or the fed.
to purchase other banks as they default.
Bank of America bought Merril lynch
Wellsfargo bought Wachovia
Suntrust bought GB+T and several other small banks.
#9.1.1 Anonymous on 07/08/09 at 11:46 PM [Reply]
That's not true. TARP money was made available to nearly every bank, regardless of whether or not the bank was public traded.

Also, SunTrust bought GB&T way before they received any TARP money.

Banks had to apply to receive TARP - the application process was fairly rigorous. There were a number of financial requirements that had to be met prior to receiving the money. Unfortunately, some banks didn't meet the requirements and were already too far gone for TARP to save them.

What it boils down to is that a large number of banks bet heavily on the real estate market and it tanked. Even the banks that stayed away from the real estate loans are suffering - individuals that they made loans to (who were probably qualified to receive the loan at the time) suffered from the real estate crisis which inhibited their ability to repay the other loans.

The FDIC and Georgia Department of Banking and Finance should have done a better job monitoring the banks' activities. That is why they were created. A bank's loan portfolio is like a person's retirement portfolio - you want to reduce risk by not putting all your eggs in one basket. Unfortunately, a lot of banks seemed to disregard that idea and went all in on a bad bet.

The majority of banks are doing just fine, and sadly that is something that the press has chosen to ignore. By publishing stories like this one, they're only creating more of a problem as customers begin to doubt the security of the bank at hand. If customers were smart enough to stay within FDIC insurance limits, they'll be taken care of.

I was extremely surprised to see this headline and am very disappointed in the paper.
#9.2 Anonymous on 07/07/09 at 12:53 PM [Reply]
White county builders were riding the gravy train for years, getting loans to buy extream amounts of property as well as getting loans to pay the interest on the loans. This happened if the builder was in good with the commercial lender at the Habersham branch. It was bound to catch up with them. I am glad it did!
#10 D Mac on 07/09/09 at 08:45 PM [Reply]
CB & T has all the public accounts of the Habersham County Government. Including SPLOST, IDA, as well as county commission general fund money. Is this tax payer money safe? With CB & T CEO Miller serving as Vice Chair of the Habersham County Commission, we might have a confict in answering that question?
#11 anonymous on 07/09/09 at 08:51 PM [Reply]
OK responder 9.1.1. You are not completely correct. The majority of banks in GA are not doing that well. Go and look at each bank's call reports as I have. Many bank in the Barrow, Jackson, Clarke, Hall, and surrounding areas are not doing well. Their leverage and Tier 1 capital levels are below the requirements of regulators. It is very apparent (your and our) government is trying to reduce the number of banks in GA. The FDIC has even made the comment and the Federal Reserve that there are too many banks in GA and they are solving this problem. We as a country have become entirely to passive when it comes to our government. If there were more of an outcry, our Congress would take more action to change accounting rules for banks which would help in the falling capital levels. A bank can not double and triple reserve for bad loans as being required now, and these reserve requirements are hurting banks. STOP the write downs and allow the market to come back. It is absurd to take a loss on loans in a time as this market until a bank actually sells a property. GA will see many more banks fail unfortunately.
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