Community South Bank, which was based in Parsons and ran 14 offices across the state, was closed Friday afternoon by regulators. The $400 million-asset bank is being taken over by Russellville, Ala.-based CB&S Bank., which has assets of $1.3 billion and operates one of its 43 offices in Murfreesboro. Community South rang up a first-half loss of $5.9 million — thanks mainly to bad real estate loans — after finishing 2012 with a $7.3 million loss. CB&S also is buying about a third of its assets. Check out the FDIC's info on the closure here.
Bank holding company Community First Inc. continues to make progress toward the capital levels imposed on it by the Federal Deposit Insurance Corp. in September 2011 even though it posted only a tiny first-quarter comprehensive profit. The parent of Community First Bank & Trust now needs $7 million in capital to meet the FDIC's heightened requirements, which means it may still have put its shareholders through a very dilutive stock offering. But the gap is now $4 million smaller than it was at the end of 2012, which was itself a decent improvement from Q3's $15.3 million.
Another note from the company's quarterly report filed last week: Because Community First has missed six straight dividend payments on the $18 million of preferred stock it sold to the U.S. Treasury four years ago, the feds now have the right to put two representatives on the company's board.
Sen. Bob Corker says the banking system — especially the largest players in the country — no longer need lawmakers to extend a special Federal Deposit Insurance Corp. program launched in 2008 and renewed two years ago. The focus from D.C. when it comes to banking, he says, is to reform parts of the massive Dodd-Frank bill, which has imposed a series of new regulations that are weighing especially heavily on community banks.
"Some of what we passed in Dodd-Frank makes a great deal of sense, but much of it does not. And it’s time for us to devote energy to fixing and improving the law where there are flaws. If we really want to help community banks, that is where we should focus our energy.
"Giving out limitless deposit insurance is what some people have decided is a consolation prize. That’s too bad. We should fix Dodd-Frank if we want to help our community banks."
The parent of Community First Bank & Trust out of Columbia posted a third-quarter net loss of $1.7 million, a number that would have been higher but for almost $700,000 in gains from the sale of securities. Community First Inc., which has been operating under various regulatory orders for almost two years, has been steadily adding to its capital cushion in the last two years. The pending sale of its high-profile Cool Springs branch will bring in more cash. And shedding more assets will help, too. But CEO Louis Holloway and his team still have a lot of heavy lifting to do: The company needs $15.3 million to meet the heightened capital requirements laid out by the Federal Deposit Insurance Corp.
Banking players and observers have for years been predicting a massive wave of consolidation in the industry. It hasn't happened yet, nor is it expected to materialize soon. Reporting on a conference this week in New York, Dan Freed says for it to happen at all, bankers first need to eat several helpings of humble pie.
Now the regulators are saying: Come into my office, run it by me first. I won't be able to give you a total blessing ahead of time but I can let you know what I'm thinking.
That sounds like a good thing. Unless you're a bank CEO. Bank CEOs--the ones that didn't get fired--have been walking around for the past five years cursing regulators every chance they get. Why, then, would they want to ask a regulator for permission to do a deal?