A high concentration of real estate-related loans -- for acquisition, development and construction -- led to the failure of Appalachian Community Bank in Ellijay.
The bank, which failed March 19, was initially profitable as it made the loans, but it weakened as the economy declined and losses grew.
A report from the Federal Deposit Insurance Corp.'s Office of Inspector General, issued Tuesday, noted that the bank also made poor-quality appraisals that led to too-low levels for loan losses.
Additionally, the bank's CEO and two other executives were replaced in November 2009 after Appalachian Community's board initiated an investigation of possible policy violations related to insider transactions.
The bank's failure caused a $420 million loss to the FDIC's deposit insurance fund. The bank had $1.04 billion in assets and 10 branches in seven counties when it failed, according to the FDIC.
Danny Jett was interim chief operating officer and a consultant with the bank for four months. Jett said he was an administrator and could not speak to credit losses or comment on how the executives leaving may have affected Appalachian.
"It was a big bank in a thriving community," Jett said. "It got hit hard with real estate problems, as a lot of large North Georgia banks did."
The FDIC routinely does reports on Georgia's failed banks, and most have shown a similar theme of real estate loan problems.
About the Author
Keep Reading
The Latest
Featured
