Appalachian Bank agrees to reduce real esate loans

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May 6, 2009

By Charles Oliver

Customers at Appalachian Community Bank should not be affected by a consent order the bank’s parent company recently agreed to with federal regulators, say company officials.

“We have a concentration in real estate loans, which is a real hot-button issue with regulators with the decline in the economy, especially in Georgia and especially in the real estate market,” said Gary Middleton, chief retail officer for the bank.

Appalahcian Bancshares, the holding company that owns Appalachian Community Bank, signed an agreement with the Federal Deposit Insurance Corp. to reduce its concentration real estate loans. The agreement took effect April 24.

“The only effect it has is that right now we are not doing any more loans for spec houses, or any speculative lending on houses,” Middleton said. “Basically, the order said we are going to quit doing that until the economy gets better and all that levels out.”

The bank must also has to decrease its concentration in real estate by working though some of its outstanding loans.

“That will be basically working with out developers. A lot of them are already reducing their prices to move (their houses),” he said.

Appalachian Community Bank has branches in Dalton and Chatsworth but its headquarters are in Ellijay.

“Our footprint is over in Ellijay, Blue Ridge, Blairsville, that area. Where carpet is the main thing in Dalton, real estate is the main thing over there,” Middleton said.

A press release from the bank says that 70 percent of the local economy is tied directly or indirectly to real estate

The press release says the bank also agreed to pay no dividends or executive bonuses without prior approval of regulators and to implement a weekly liquidity monitoring program.

But Middleton says customers shouldn’t notice any changes and he says deposits are still guaranteed up to $250,000 by the FDIC.

“There’s no issue with that,” he said.