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Atlanta-area banks complete merger -- will more banks follow suit?

Two banks that are centered in the Atlanta, Georgia suburb of Doraville have merged with the help of the Federal Deposit Insurance Corporation. The recent merger saw Metro City Bank take control of Global Commerce Bank, with Metro City purchasing $79 million of GCB's $143.7 million in assets. The FDIC will be responsible for the remainder of Global Commerce's assets.

Global Commerce had a Tier 1 leverage ratio under 2%. The ratio is used by regulators to determine the overall financial strength of a bank, comparing a bank's core equity capital to any risk-weighted assets. When a bank receives the Tier 1 label and their ratio falls beneath 2%, regulators must find an appropriate buyer for the bank within 90 days - otherwise, the bank folds.

There are more reports coming out about the stability of banks in Georgia. According to FIG Partners, there is a minimum of 30 banks in the state that could cross the 2% threshold; in addition, Covenant Bank & Trust has been below the Tier 1 leverage ratio of 2% since the December 31.

Global Commerce is the third Georgia bank to close in 2012. On January 20, The First State Bank was absorbed by Hamilton State Bank; while on February 24, Central Bank of Georgia was captured by Ameris Bank.

As FIG Partners reports, there are many more banks on the horizon that could be facing regulatory action. These banks that are struggling to stay above water will try to protect their interests as best they can.

Source: Atlanta Business Chronicle, "Two Doraville banks merge in FDIC deal," Kat Greene, Mar. 2, 2012

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