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 head of the Minnesota bank that took over the failed Covenant Bank & Trustin Rock Spring, Ga., on Monday said he hopes to add more services and possibly acquire other banks in Georgia.
Stearns Bank National Association, a $1.3 billion bank based in St. Cloud, Minn., reopened the shuttered Covenant Bank offices in Rock Spring and Dalton and acquired more than $90 million of bank deposits on Monday.
Stearns emerged Friday as the winning bidder for the assets of Covenant Bank, which state regulators shut down over the weekend after the bank lost more than $9 million from soured real estate and other loans in the past three years.
Stearns hired all but former Covenant Bank CEO Trent Sanford among Covenant's 21-employee staff.
"We hope we can better serve these bank customers with the strength of our capital and our status as a preferred SBA (Small Business Administration) lender," said Norm Skalicky, the chief executive and largest shareholder for Stearns Bank. "We're a heavily capitalized bank and we can come in to help the bank, the employees, the community and the FDIC."
The purchase of Covenant's assets is the seventh such acquisition of a failed bank by Stearns. Skalicky said his bank is looking at more such FDIC-aided purchases, including others in Georgia.
"We'll see how it goes, but I think we'll bid on other banks (in Georgia) because there are others in a similar situation," he said.
The Federal Deposit Insurance Corp., which regulates banks and insures deposits up to $250,000, will absorb 80 percent of the cost of the loan losses from Covenant's failure and expects the insurance fund to lose about $31.5 million from the bank failure.
Covenant was the 78th Georgia bank to fail since the recession began in 2008 -- the most of any state. Despite Georgia's record number of bank failures, the industry is showing improvement, analysts said Monday.
"The picture from 2011 was a year of stabilization and improvement for our industry," said David Oliver, a senior vice president for the Georgia Bankers Association. "Earnings turned positive for the first time since 2008."
Last year, 60.3 percent of Georgia's 238 banks reported profits, up from 45.9 percent the previous year. Overall, Georgia banks made $569.8 million in 2011, a $2.4 billion improvement from the collective losses in 2010, Oliver said.
Weiss Ratings, a leading independent rating agency of U.S. financial institutions, reported Monday that profits were up for banks nationwide in the fourth quarter for the second year in a row.
Of the 78 bank failures in Georgia, the FDIC has arranged for other banks to take over the assets of the failed banks in all but six instances.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340