Banks comply with U.S. directive

Three North Georgia banks got public notice this week from federal regulators that they need to improve their finances and operations.

The Federal Deposit Insurance Corp., issued the consent orders in November to Northwest Georgia Bank, First Bank of Dalton and Bank of Ellijay, but the documents have now been made public.

The legally binding orders came as a result of the FDIC's yearly review in December 2008, so bank managers say the requirements listed -- mostly increasing capital and reducing the number of delinquent loans -- largely have been addressed already.

"We identified everything early, earlier than most banks, so we're projecting back to profitability in 2010," said Scott Smith, president and chief operating officer of Northwest Georgia Bank, which is based in Ringgold.

Mr. Smith's bank, which has $586 million in assets, now has excess capital and more liquidity than it has ever had, he said.

Larry Swanson, chairman and chief executive officer of the First Bank of Dalton, said his institution issued more stock to raise $7 million of additional capital. Stockholder dividends already had been withheld, and employees in all four branches received 10 percent pay cuts and a 2 percent reduction in labor.

"You're always concerned when you have the type of issues you don't want every day, but we're stronger than we were a year ago," Mr. Swanson said. "There's no need for customers to be concerned."

Bank of Ellijay President Mark Nay could not be reached for comment Tuesday.

Of the 51 directives released in November by the FDIC, 34 of them were consent orders such as those the three banks received, according to spokesman David Barr.

"When you're in a down economic period, the number of these orders tend to increase. It's one of our more common forms of action," Mr. Barr said. "But it's serious and we do expect the banks to comply."