Security Bank faces reverse and wanes

It was once thought by the financial pundits that the banks with sufficient assets would be able to either avert the brunt of the economic downfall or shield against itself against any form of nefarious design. Is the situation same? Well, if any one thinks so, he is far from the truth. Take for instance Security Bank, it is the fourth-largest Georgia-based bank. The bank is witnessing a bizarre situation as a burgeoning fund of bad real estate loans has dealt a severe blow on its foundation and made it affix for public notice big losses in the fourth quarter.

Let’s focus on the figures published by the back in the recent days. According to the available figures, the bank lost $42.4 million in the fourth quarter, or $1.82 per share, and along with this $208 million for the year. The fourth-quarter figures consisted of a goodwill impairment charge of $18.4 million as well. On the word of financial experts, the condition is quite serious and the stock price of the company plunged 21 percent to 91 cents per share, which has come out as the lowest in the last decade. You may not believe but it’s a reality that Security’s stock has fallen 87 percent only in the last six months.

If anyone poses the reason behind this, it is agreed. Now if we turn to the financial gurus they will allege, it is the troubled metro Atlanta market. Security Bank took over suburban Atlanta banks in 2005 and 2006 to take advantage of the area’s lucrative properties. The outcome happened to be just the opposite and the housing bubble subsequently detonated leading to a flood of bad loans.

Speaking on this, Tony Collins, president and CEO of Security Bank exclaimed, “While we anticipated that nonperforming assets would remain elevated through the year, the significant decline in growth in the economy, and the residential real estate market in particular over this period, has made it difficult to sell [bank-owned property] and reduce problem credits.”