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Banking & Finance

FDIC Moves Against Atlantic Southern Bank

SBJ Staff Report

Atlantic Southern Bank, owned by Atlantic Southern Financial Group of Macon, received a Cease and Desist Order from the FDIC on Sept. 17, but the bank will continue to operate without interruption, according to the bank’s spokesperson.  It was the first local bank to receive such an order.

“The FDIC has approved a plan to have Edward P. Loomis Jr. run the bank. He has been through this before, working with the FDIC,” according to its spokesperson.

Loomis was named president & CEO of Atlantic Southern Bank on July 31, 2009. That day, the financial group reported a net operating loss of $4.3 million, or $1.01 per diluted share, for the second quarter of 2009, driven by elevated credit costs including a $5.7 million provision in the allowance for loan losses.

The order is a “Stipulation and Consent to the Issuance of an Order to Cease and Desist,” with both the FDIC and the Georgia Department of Banking and Finance (GDBF), and was based on findings of the FDIC during the on-site examination conducted as of Feb. 17, 2009.

Since the completion of the examination, “the Board of Directors has aggressively taken an active role in working with the FDIC and the GDBF to improve the condition of the Bank. In entering into the Consent Agreement, the Bank did not concede to the findings or admit to any of the assertions therein,” according to the FDIC.

The bank cannot declare dividends without the prior written approval of the FDIC and the GDBF, and has agreed to strengthen its board of directors' oversight of management and operations of the bank; establish a committee consisting of at least four members, three of which must be independent, to oversee the bank's compliance with the order; maintain specified capital and liquidity ratios; improve the bank's lending and collection policies and procedures, particularly with respect to the origination and monitoring of commercial real estate and acquisition, development and construction loans;  eliminate from its books, by charge off or collection, all assets classified as "loss" and 50 percent of all assets classified as doubtful; perform risk segmentation analysis with respect to concentrations of credit;  receive a brokered deposit waiver from the FDIC prior to accepting, rolling over or renewing any brokered deposits and submit a written plan for eliminating its reliance on brokered deposits; adopt and implement a policy limiting the use of loan interest reserves;  formulate and fully implement a written plan and comprehensive budget for all categories of income and expense; and prepare and submit progress reports to the FDIC and the GDBF.

For the second quarter ended June 30, 2009, the bank took at one-time $19.5 million non-cash charge for impairment of goodwill.  Including the goodwill impairment, the net loss for the quarter was $23.8 million, or $5.65 per share compared to net earnings of $708 thousand, or $.17 per share, in the second quarter of 2008.

Donald L. Moore Jr., president of Donald L. Moore, Inc., a commercial contracting firm with headquarters in Savannah, since 1973, serves on the board of directors and the Audit Committee of Atlantic Southern Financial Group. The other board members are from the Macon or middle Georgia area.
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