FNB failure a big blow

By Walter GeigerThere have been so many bank failures in Georgia and elsewhere around the country in recent months that we all have become somewhat conditioned to them. But, when one of two banks in your hometown fails, the severity of the blow is so readily apparent ‘“ the aftershocks so intense ‘“ one worries for the future of the community and the entire country.When the Comptroller of the Currency closed First National Bank of Barnesville and its branch in Zebulon Friday, officials removed from the bank wall the charter that had hung there since 1902.First National was not the first Barnesville bank to fail. In fact, it was born out of a spate of bank failures in the late 1800s and early 1900s.Barnesville Savings Bank was chartered in 1870. It failed in 1901, went into receivership and was reorganized in 1902 as Barnesville Bank. It would later become First National Bank.Other early banks also failed. There was a general bank failing in 1873. Another in 1901 took out New South Savings Bank and Peoples Bank.Citizen’s Bank also formed in 1902 and merged with First National Bank in 1929.So FNB survived hard times at its inception.It survived the Great Depression.But, it could not survive the current Great Recession.When it died it took with it the life’s work of many fine folks who built it from next to nothing to having 6,000 depositors.When FNB stock was rendered worthless, the savings of fine people and the inheritances of their children and grandchildren were devastated.FNB is not alone in its demise. Nearly 300 U.S. banks have collapsed since September, 2008.More will follow.Some predict the number of U.S.banks, now at just over 7,900 could fall to 5,000 in the next 10 years.While the autopsy of FNB is not yet complete ‘“ some 80 FDIC personnel rolled in Friday night and continue to conduct it at this writing ‘“ real estate will be the cause of death as it has been at many other institutions.A study by SNL Financial found that 94% of failed banks since 2008 had real estate loans as their largest delinquent category.Real estate boomed. Fortunes were being made. Every bank tried to get in on the action. Many banks were formed specifically to get in on the action.Then, the bubble burst.Real estate values plummeted to a fraction ‘“ a small fraction ‘“ of the amounts loaned on them.Banks were required to get new appraisals which reflected the lower values and their capital, like wheat before a swarm of locusts, was eaten alive in making up the differences.In hundreds of cases, developers went belly up.Subdivisions with infrastructure grow up in weeds.Builders unable to meet construction loan obligations handed the keys to new, never lived in homes back to their bankers and walked away.Thus blew up the perfect storm for the failure of many businesses ‘“ banks included.FNB tried to get in on the action and it got burned as so many others have and will.The failure is the ugly side of the business. It is hard to paint a pretty face upon it.Risk sometimes leads to reward and sometimes it leads to disaster. In this instance it led to disaster.Our own local, personal disaster was mitigated greatly by United Bank which stepped in, despite great trepidation, to take over the assets and deposits at FNB.In so doing, it saved considerable, uninsured deposits, will save at least a portion of the jobs of FNB personnel and will forestall the boarding up of two prominent buildings in Barnesville and Zebulon.We should be thankful to all those at United Bank for stepping up in a time of dire community need.What will happen next?Who knows.Some of those at FNB felt as if the government was out to get rid of banks ‘“ to thin the herd of financial institutions ‘“ and nothing they could do would prevent it.Certainly, our government as it is currently operated is no friend to business large or small.We have a president in the White House who has openly admitted his hatred of our free enterprise system.If this failure didn’t hit home for you personally, the next one very well could.Perhaps Charles Dickens’ character Tiny Tim Cratchit said it best in the classic ‘˜A Christmas Carol’.’God bless us, every one!’ Historical data courtesy of Shanna English, Old Jail Museum, Barnesville. Walter Geiger is editor and publisher of The Herald Gazette, Barnesville, and Pike County Journal Reporter.