published Saturday, March 24th, 2012

Walker County's Covenant Bank closing

The Covenant Bank & Trust building is located in Rock Spring, Ga. Regulators shut down the bank on Friday, which will reopen next week as a branch of Stearns Bank.
The Covenant Bank & Trust building is located in Rock Spring, Ga. Regulators shut down the bank on Friday, which will reopen next week as a branch of Stearns Bank.
Photo by Doug Strickland.

State regulators on Friday closed Covenant Bank & Trust in Rock Spring, Ga., the fourth bank in Georgia shuttered so far this year.

The two-branch bank, with assets of about $95.7 million, will reopen Monday as a branch of Stearns Bank, National Association, based in St. Cloud, Minn., according to the Federal Deposit Insurance Corp.

The Georgia Department of Banking and Finance pulled Covenant Bank's charter and closed the bank, said FDIC spokesman Greg Hernandez.

The FDIC and Stearns Bank entered into a loss-share transaction on $71.6 million of Covenant's troubled assets. Hernandez said that figure was the estimate of how much it would cost the deposit insurance fund if the bank was liquidated.

Covenant depositors automatically will become Stearns Bank customers. Covenant deposits, put at about $90.6 million, will continue to be insured by the FDIC.

Over the weekend, the FDIC said Covenant depositors can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed, while loan customers should make their payments as usual.

The bank will maintain its regular business hours, and customers may continue to use the services to which they previously had access, such as safe deposit boxes, night deposit boxes, and wire services, according to the FDIC.

Covenant Bank opened in 2006 and was the third largest bank in Walker County, Ga. It also has a branch in Dalton, Ga.

Stearns was founded in 1912 and now has bank locations in Minnesota, Arizona, Florida and Georgia.

Norman Skalicky, chief executive of Stearns Bank, said in a statement that Covenant customers "will continue to be served by the same friendly professionals and their deposits continue to be insured by the FDIC up to the legal limit and backed by the considerable capital strength of Stearns Bank."

With the acquisition, Stearns Bank now has 10 offices in the four states. Stearns Bank has about $1.3 billion in total assets and $234 million of tier one capital.

According to Hernandez, 14 banks have been closed nationally so far this year.

about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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