By Valerie Baldowski
High Trust Bank in Stockbridge is under a consent order to maintain adequate capital and formulate a plan to reduce its risk of exposure to shaky loans.
The Federal Deposit Insurance Corporation announced the consent order -- along with enforcement actions involving four other Georgia banks -- earlier this week.
Burt Blackmon, president and CEO of High Trust, said there will be no negative repercussions for bank customers. "We have no intentions of closing the bank," said Blackmon. "We won't have any staff reductions as a result of the consent order."
The bank agreed last month to the 18-page order from the FDIC and the Georgia Department of Banking and Finance, which spells out actions it should take to strengthen its financial position.
"With this stipulation, the Bank has consented, without admitting or denying any charges of unsafe or unsound banking practices, or violations of law or regulation relating to weaknesses in asset quality, capital adequacy, earnings, management effectiveness, liquidity, and sensitivity to market risk, to the issuance of this Consent Order by the FDIC and the Department," the consent order states.
The order is dated Nov. 20, though it was only announced by the FDIC this week.
The agreement will require High Trust to maintain liquidity levels acceptable to the FDIC, Blackmon said.
"Within 10 days from the effective date of this order, the bank shall eliminate from its books, by charge-off or collection, all assets or portions of assets classified 'Loss' and 50 percent of all assets or portions of assets classified 'Doubtful' in the report that have not been previously collected or charged-off unless otherwise approved in writing by the Supervisory Authorities," according to consent order.
"All banks have bad loans," Blackmon said. "Most of the distressed assets with any bank at this time are secured by real estate."
Blackmon said the scrutiny is a by-product of the contracted economy, and the deterioration of assets on the books of some banks.
"This has become a common procedure throughout the state of Georgia," said Blackmon. "You're going to see more and more of these."
Blackmon predicted 70 percent of all banks in Georgia will be under some type of consent order by the end of 2010. The move is a proactive measure by the FDIC to take action before a bank gets into more serious trouble and is forced to close, he added.
Several banks in Henry County have been hard hit by the downturn in the economy.
Federal regulators seized control of McDonough-based FirstBank Financial Services, turning its deposits over to Regions Bank of Birmingham in February. In March, regulators shut down FirstCity Bank of Stockbridge.