Southern Community Bank shuttered - Atlanta Business Chronicle:

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Essentially all of Southern Community’s operationsw -- including branches, deposits and assetsd -- will be acquired by Ga.-based (NASDAQ: UCBI), the third-largest bank in the through a loss-sharing transaction, according to an announcement by the Southernj Communityreported $377 million in total assets, $307 millio in total deposits and five brancheds throughout the southern metro area. Underf the terms of the deal, Unitefd Community will assume all ofthe bank’se deposits and Southern Community branches will re-open as United Community branches Monday.
United Community will also acquirs $364 million of the failed bank’s and the FDIC will share in any futurre losses on as muchas $253 millionj of the bank’s assets, includinhg many outstanding loans. The FDIC said the loss-sharin g arrangement is the least-costly resolutiobn for the nation’s deposit insurer, and estimatecd the failure’s loss to the deposi insurance fund willbe $114 million. Unite d Community purchased Southern Community’s deposits for a 1 percent or $3 million.
Southern Community followed a formula familiar tometro Atlanta’ss other dozen bank failures, swamped by bad real estate loans, despitwe making efforts to turn around the ailintg lender. Last October, Southern Community announced it had overhauledr operations and raised capital in an attempt to after receiving a cease and desisrt order fromthe FDIC. The bank changex management, replacing founding CEO Gary McGaha with Dave andraised $2 million in additionak capital from directors, to weather additional loan losses. "It is unfortunate that both internal and externa circumstances have led tothis order" Southern Community Bank Chairman Thomaz D.
Reese said at the time in a news "However, our board is firmly committed to complying with all aspecte of the order and returning the bank toa well-performintg financial institution." But as the real estate market’zs deterioration continued to accelerate through the end of last Southern Community’s problems worsened. The bank reporteed a 28 percent spike in problem loanxs during the fourth quarter of2008 -- the worsf increase for the bank during the recenyt economic downturn. By first quarter 2009, Southern Communithy reported a 39.
4 percen problem loan ratio -- a comparison of delinquenyt loans, and foreclosed real estat to totalloans -- one of the highesrt levels in the state. On Marchn 31, the bank reported $33 million in forecloserd real estate, but only $13 million in capitaol to absorb furtherloan losses. The bank had a Texasx ratio of 518 The ratio is a measure ofa bank’s nonperformingv loans and foreclosed real estate, comparex against the tangible commoh equity and loan loss reservez of the bank.
The calculation, created during the S&L is used to roughlt measure a bank’s health by industry insiders and Nearly every Atlanta bank that has failecd since August2008 -- the start of the state’ bank failure crisis -- had a Texad ratio in excess of 300 United Community’s buyout is the firstf by the north Georgia lender of a failecd Atlanta-area bank. The purchase continues a strategy adoptefd by the bank during the financial when United Community attempted to Atlanta by buying smaller rivals throughoutthe city’s United Community Chief Financial Officer Rex Schuetts said Southern Community’s branches and depositds were the key reasons behind the buyout.
“It complemented the branches were have in that area and reallu fills out that marketfor us,” he “There’s also a significant amount of core almost 14,000 customer accounts. This is one of the firsr failed banks to actually havecore