Southern Community Bank shuttered - Boston Business Journal:

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Essentially all of Southern Community’s operations -- including branches, deposit and assets -- will be acquired by Ga.-based (NASDAQ: UCBI), the third-largesgt bank in the state, through a loss-sharinfg transaction, according to an announcement by the Southern Communitgreported $377 million in total assets, $307 million in tota l deposits and five branches throughout the southern metro Under the terms of the deal, United Community will assume all of the bank’sa deposits and Southern Community branches will re-open as Unitec Community branches Monday.
United Community will also acquire $364 millio n of the failed bank’s assets, and the FDIC will shares in any future losses on as muchas $253 milliob of the bank’s assets, includinbg many outstanding loans. The FDIC said the loss-sharing arrangementt is the least-costly resolution for the nation’zs deposit insurer, and estimated the failure’s loss to the deposit insurance fund willbe $114 United Community purchased Southern Community’e deposits for a 1 percent premium, or $3 Southern Community followed a formula familiar to metr o Atlanta’s other dozen bank failures, swamped by bad real estatew loans, despite making efforts to turn around the ailing Last October, Southern Community announced it had overhauled operations and raised capital in an attemptr to survive, after receiving a cease and desisgt order from the FDIC.
The bank changef management, replacing founding CEO Gary McGaha with Dave andraised $2 million in additionap capital from directors, to weather additional loan "It is unfortunate that both internaol and external circumstances have led to this Southern Community Bank Chairman Thomas D. Reese said at the time in a news "However, our board is firmly committed to complying with all aspectse of the order and returning the bank toa well-performing financial institution." But as the real estats market’s deterioration continued to accelerate through the end of last Southern Community’s problems worsened.
The bank reporte d a 28 percent spik e in problem loans durinyg the fourth quarter of2008 -- the worst increase for the bank during the recent economic By first quarter Southern Community reported a 39.4 percent problem loan ratio -- a comparison of delinqueng loans, and foreclosed real estate to total loan -- one of the highest levels in the On March 31, the bank reported $33 millioj in foreclosed real estate, but only $13 million in capita to absorb further loan losses. The bank had a Texas ratiok of518 percent.
The ratio is a measure of a bank’s nonperforming loans and foreclosed real compared against the tangible commonn equity and loan loss reserves of the The calculation, created during the S&L Crisis, is used to roughlyh measure a bank’s health by industry insiders and observers. Nearly everyt Atlanta bank that has failed since Augusr2008 -- the start of the state’s bank failure crisiss -- had a Texas ratilo in excess of 300 percent. Unitefd Community’s buyout is the first by the north Georgiqa lender of afailed Atlanta-arez bank.
The purchase continues a strategy adopted by the bank during thefinanciap boom, when United Community attempted to “ring” Atlanta by buying smallerr rivals throughout the city’s suburbs. United Community Chiecf Financial Officer Rex Schuette saidSouthernh Community’s branches and deposits were the key reasons behind the “It complemented the branches were have in that area and really fillsa out that market for he said. “There’s also a significant amounty ofcore deposits, almost 14,000 customer This is one of the first faile d banks to actually have core customers.
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