Freedom Bank of Georgia was closed yesterday by the Georgia Department of Banking and Finance. Northeast Georgia Bank assumed the deposits of the bank.
As of March 4, 2009, Freedom Bank of Georgia had total assets of approximately $173 million and total deposits of $161 million. In addition to assuming all of the deposits of the failed bank, Northeast Georgia Bank agreed to purchase approximately $167 million in assets at a discount of $13.65 million. The FDIC will retain the remaining assets for later disposition.
These remaining assets are most likely brokered deposits which the FDIC typically covers up to the FDIC maximum. Once again, it appears that the FDIC has backstopped an arrangement that will keep depositors, except for brokered deposits, whole. The downside is that these transactions are depleting the FDIC insurance fund, requiring the agency to raise more money from the very banking system that is under stress.
Out of curiosity, I wanted to see what rating Baeur Financial gave to Freedom Bank. For those that don't know, Bauer Financial is a company that analyzes banks' financial statements and provides a quarterly rating on their safety and soundness. I was pleased to see that they had rated Freedom Bank a ZERO in their last update, the worst possible score. The score is based on data from several months ago so there does seem to be some predictive ability there, at least with Freedom Bank.
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