2010 annual report

State of Georgia
Department of Banking & Finance

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State of Georgia
Department of Banking and Finance
ANNUAL REPORT
For Year Ending December 31, 2010
Nathan Deal Governor
Rob Braswell, CEM Commissioner

Table of Contents

Message from the Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . .

5

Organizational Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

Structure of the Department . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

Supervisory Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

Division Profile and Staff Contact Information (as of 4/30/2011) . . . . . . . . . . .

8

Summary of Activities for 2010 . . . . . . . . . . . . . . . . . . . . . . . . . .

13

State-Chartered Banking Statistics . . . . . . . . . . . . . . . . . . . . . . . .

14

State-Chartered Credit Union Statistics . . . . . . . . . . . . . . . . . . . . . .

16

Other Supervised/Registered Financial Institutions . . . . . . . . . . . . . . . . .

17

State-Chartered Bank Financial Summary . . . . . . . . . . . . . . . . . . . . . .

18

State-Chartered Credit Union Financial Summary. . . . . . . . . . . . . . . . . . .

19

Examination Districts and Work Areas (Map) . . . . . . . . . . . . . . . . . . . .

20

Non-Depository Financial Institutions Division . . . . . . . . . . . . . . . . . . . .

21

Division Profile and Staff Contact Information (as of 4/30/2011) . . . . . . . . . . .

21

Summary of Activities for 2010 . . . . . . . . . . . . . . . . . . . . . . . . . .

23

Mortgage Licensee and Registrant Statistics. . . . . . . . . . . . . . . . . . . .

24

Money Services Businesses (MSB) Statistics . . . . . . . . . . . . . . . . . . . .

25

Legislative Highlights for 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . .

26

Administrative Division Highlights for 2010 . . . . . . . . . . . . . . . . . . . . .

27

Division Profile and Staff Contact Information (as of 4/30/2011) . . . . . . . . . . .

28

Fiscal Year Receipts and Disbursements . . . . . . . . . . . . . . . . . . . . . . .

29

2010 Highlights from the Director of Communications and Planning . . . . . . . . . .

30

Summary of Activities for State-Chartered Financial Institutions and Other Entities . . .

31

Regulated by, Licensed by, or Registered with the Department of Banking and Finance

During 2010

2010 Annual Report

Page 4

Message from the
Commissioner

Welcome to the Department of Banking & Finance's 2010 Annual Report. This year has been one in which both the Department and the entities we regulate have certainly had to adapt to the challenges presented by these troubled economic times. I will attempt to summarize the activities of the Department, as well as highlight many of the changes that occurred this past year. Also, I encourage you to review the pages in which the Deputy Commissioners and the Director for Communications and Planning have listed additional 2010 highlights and activities for their respective areas of responsibility.

Regarding the entities we regulate, 2010 remained a difficult year for many of our institutions due to the weak housing market and depressed real estate values. Banks with concentrations in acquisition, development and construction lending continued to be hit the hardest, and unfortunately, led to the Department having to close 15 banks in 2010.

ROB BRASWELL Commissioner

The operating performance of most state-chartered credit unions in 2010 could best be described as stable as key ratios remained on par with 2009 levels. One federal credit union converted to a state charter, but overall, the number of state-chartered credit unions decreased slightly due to continued merger activity and the conversion of one state-chartered credit union to a federal charter.

Also of note, our Supervisory Division was restructured effective December 31, 2010, in order for the Department to better operate within its budget and to more efficiently fulfill its mission. I am very pleased with the results of this restructuring thus far, and I would like to express my appreciation to the Department's staff members and the affected institutions that adapted to these changes so readily.

The mortgage side of the Non-Depository Financial Institutions (NDFI) Division remained extremely active in 2010 as it continued to combat mortgage fraud in Georgia while also licensing approximately 4,400 mortgage loan originators for the first time. The number of enforcement actions, including cease and desist orders, consent orders, revocations and license denials remained very high in 2010 due to the effectiveness of the risk-focused program and implementation of the Secure and Fair Enforcement (S.A.F.E.) Act. In fact, industry data indicates that Georgia's mortgage fraud index has continued to markedly decline and is no longer one of the top ten states regarding mortgage fraud! I want to take this opportunity to say "thank you" to the many partners with whom we routinely collaborate to protect the citizens of Georgia from mortgage fraud.

The Department also remained active in the oversight of Money Service Businesses (MSBs) by performing nearly 150 examinations and issuing three administrative actions. The MSB side of the NDFI Division ensures that these entities are properly licensed and comply with State law, the Bank Secrecy Act, and the requirements of the Office of Foreign Assets Control.

Page 5

2010 Annual Report

Message from the
Commissioner
As you will see in the highlights of the Legal and Consumer Affairs (LCA) Division, the Department updated many of its rules via a separate rulemaking process. Due in large part to the current economic climate, several rule changes were made to provide greater flexibility to deposit institutions when dealing with their respective loan customers.
Lastly, I want to thank you for your feedback regarding our customer service effectiveness. We are constantly striving to exceed your expectations and to do our part in making Georgia the best managed state in the nation. Several of the initiatives highlighted throughout this report were developed due to the invaluable feedback that you provided; therefore, please keep your comments and suggestions coming.
As always, it remains our goal to be the best financial services industry regulator in the country. Thank you for your support of these efforts.
Sincerely,
Rob Braswell
Rob Braswell, CEM Commissioner

2010 Annual Report

Page 6

ORGANIZATIONAL PROFILE

The Department of Banking and Finance (Department) is the state agency that regulates and examines banks, credit unions, and trust companies chartered by the State of Georgia. The Department also has regulatory and/or licensing authority over mortgage brokers, lenders, processors and mortgage loan originators (MLOs); money service businesses; international banking organizations; and bank holding companies conducting business in Georgia.
Financial institutions and financial service providers are subject to strong statutory and regulatory requirements at both the federal and state levels. We share regulatory responsibility for Georgia state-chartered financial institutions with our federal counterparts (FDIC, FRB, NCUA). We are the sole regulatory agency for mortgage brokers, lenders, processors and MLOs, and money service businesses (with the exception of FINCEN and the IRS, which supervise the Bank Secrecy Act, USA PATRIOT Act and other anti-money-laundering efforts).

ACRONYMS:
CEM - Certified Examinations Manager
CEIC - Certified Examiner-InCharge
CFE - Certified Financial Examiner or Certified Fraud Examiner
CPA - Certified Public Accountant
CSCUES - Certified State Credit Union Examination Supervisor

STRUCTURE OF THE DEPARTMENT
Functionally, the Department reports directly to the State's Chief Financial Officer and the Governor. The Department is headed by a Commissioner who is appointed by the Governor to serve a four-year term. Commissioner Rob Braswell is assisted by Senior Deputy Commissioner Steve Pleger.

The Department's operations are divided along functional lines: Supervision,

Administration, Non-Depository Financial Institutions, and Legal and Consumer Affairs.

These divisions are headed by Deputy Commissioners. The Director of Communication

STEVE PLEGER

and Planning reports directly to Commissioner Braswell and is primarily responsible for: website administration; coordinating e-government initiatives; external publications;

coordinating strategic and business planning; coordinating accreditation processes for the

Department's bank and credit union supervisory programs; examination survey report compilation/analysis;

coordinating employee survey processes; overseeing/coordinating all business resumption and emergency preparedness

procedures and plans; and coordinating any marketing efforts of the Department.

NAME Rob Braswell, CEM Steve Pleger, CEM Carol Webb, CEM Susan Brown

TITLE Commissioner Senior Deputy Commissioner Director of Communications and Planning Office Manager

PHONE # 770-986-1628 770-986-1629 770-986-1386 770-986-1621

On the following pages, you will find a list of employees by Division and/or District Work Area. Group pictures of division and district employees can be found in each Division's Summary of Activities for 2010.

Page 7

2010 Annual Report

SUPERVISORY DIVISION

Supervision is responsible for the supervision, regulation, and examination of depository financial institutions and their affiliated companies that fall under the regulatory authority of the Department. Such institutions include state-chartered banks, trust companies and credit unions; bank holding companies; and international banking organizations. Supervision is also responsible for financial institution application, registration and notification processing. The Division is headed by Deputy Commissioner for Supervision Kevin Hagler.
Main Office Staff

KEVIN HAGLER Deputy Commissioner for
Supervision

NAME Kevin Hagler, CEM Lori Godfrey, CEM/CFE Lori Binford, CEM Mike Killeen, CEM/CSCUES Laura Millen, CEM Murali Ramachandran, CEM Merian Johnson Susan Rosentreter

TITLE Deputy Commissioner for Supervision Director for Supervision Supervisory Manager (Banks -District 1, SunTrust, Synovus) Supervisory Manager (Banks -District 2, Credit Unions) Supervisory Manager (Banks -Districts 4 & 5, Trust) Corporate Manager (Banks -District 2, Applications) Administrative Assistant Administrative Assistant

PHONE # 770-986-1646 770-986-1636 770-986-1627 770-986-5049 770-986-1643 770-986-1645 770-986-1658 770-986-1659

2010 Annual Report

From left to right (front): Susan Rosentreter, Laura Millen, Lori Godfrey From left to right (back): Lori Binford, Murali Ramachandran, Merian Johnson, Mike Killeen

Page 8

SUPERVISORY DIVISION Division Profile and Staff Contact Information
District Work Area Staff
The Department currently has four examination districts which have district work areas located in various geographic regions of the state to facilitate the supervisory process.

NAME Melissa Sneed, CEM Daisy Mitchell, CEM Rich Parker, CEM Ernie Coats, CEIC Evans Yancy Candice Daniel, CEIC Derek Thompson, CEIC George Campbell, CEIC Vic Greene, CEIC Larry Moody, CEIC Presley Norris, CEIC Mark Pressler, CEIC Ryan Baker Aaron Fisher Kevin Vaughn

District 1--Northwest
TITLE District Director Supervisory Examiner Supervisory Examiner Capital Markets Specialist Credit Specialist Senior Financial Examiner Senior Financial Examiner Financial Examiner Financial Examiner Financial Examiner Financial Examiner Financial Examiner Senior Assistant Financial Examiner Senior Assistant Financial Examiner Senior Assistant Financial Examiner

From left to right (1st row): Presley Norris, Aaron Fisher, Mark Pressler From left to right (2nd row): Ryan Baker, Ernie Coats, Kevin Vaughn
From left to right (3rd row): Derek Thompson, Melissa Sneed, George Campbell From left to right (4th row): Evans Yancy, Rich Parker, Candice Daniel From left to right (back row): Vic Greene, Daisy Mitchell, Larry Moody
Page 9

Northwest District 1 - Woodstock
645 Molly Lane, Suite 140 Woodstock, Georgia 30189 Phone: (770) 928-1803 Fax: (770) 928-6209
2010 Annual Report

SUPERVISORY DIVISION Division Profile and Staff Contact Information

District 2--Northeast/Central

NAME Heather Sartain, CEM Harold Carney, CEM
Dennis McNeer, CEM
Brittany Bohannon, CEIC
Pam Keane, CEIC Justin McElheney, CEIC Mathew Robinson, CEIC Robert (Jay) Duncan Lauren Ivey Brett Poole Cacey Rogers Victoria Williams Langford Hutcherson Michael Thomas Dustin Thompson

TITLE District Director Supervisory Examiner
Supervisory Examiner
Senior Financial Examiner
Senior Financial Examiner Senior Financial Examiner Financial Examiner Senior Assistant Financial Examiner Senior Assistant Financial Examiner Senior Assistant Financial Examiner Senior Assistant Financial Examiner Senior Assistant Financial Examiner Assistant Financial Examiner Assistant Financial Examiner Assistant Financial Examiner

From left to right (1st row): Heather Sartain, Lauren Ivey, Mathew Robinson, Dennis McNeer, Victoria Williams, Brittany Bohannon, Pam Keane
From left to right (2nd row): Harold Carney, Justin McElheney, Jay Duncan, Dustin Thompson, Langford Hutcherson, Brett Poole,
Cacey Rogers
Not Pictured: Michael Thomas

Northeast District 2 - Loganville
3715 Harrison Road, Suite 100 Loganville, Georgia 30052
Phone: (770) 554-0676 Fax: (770) 554-5915

2010 Annual Report

Page 10

SUPERVISORY DIVISION Division Profile and Staff Contact Information

District 4--Southeast

NAME Gary Ford, CEM/CSCUES Michael Hooks, CPA/CEM David Widincamp, CEM/CSCUES Vicki Brantley, CEM Janet Bryan, CEIC Michael Bryan, CEIC Mark Smith, CEIC/CSCUES Patrick Brahana, CEIC Bob Herndon, CEIC William (Trey) Craig, III Kimberly Nobles Jakeise Moody Lucas Richardson

TITLE District Director Supervisory Examiner Supervisory Examiner Senior Financial Examiner/Training Specialist Senior Financial Examiner Senior Financial Examiner Senior Financial Examiner Financial Examiner Financial Examiner Senior Assistant Financial Examiner Senior Assistant Financial Examiner Assistant Financial Examiner Assistant Financial Examiner

From left to right (front row): Michael Bryan, Janet Bryan, Mark Smith, Kimberly Nobles, Michael Hooks
From left to right (back row): Gary Ford, Patrick Brahana, William (Trey) Craig, III, David Widincamp, Bob Herndon, Lucas Richardson
Not Pictured: Vicki Brantley, Jakeise Moody

Southeast District 4 - Dublin
P.O. Box 965 Dublin, Georgia 31040 Phone: (478) 275-6740 Fax: (478) 275-6742

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2010 Annual Report

SUPERVISORY DIVISION Division Profile and Staff Contact Information

District 5--Southwest

NAME Virginia Riddick, CEM Susan Andrews, CEIC Joyce Jones, CEM/CSCUES John Sonnier, CPA/CEIC Sue Ann Tucker, CEIC Terry Tucker, CEIC James Johnson, CEIC Jim Mixon, CEIC Natalie Holder Alicia Ashley Peter Crowley Frankie Keeling Amy Lee

TITLE District Director Supervisory Examiner Supervisory Examiner Senior Financial Examiner Senior Financial Examiner Senior Financial Examiner Financial Examiner Financial Examiner Senior Assistant Financial Examiner Assistant Financial Examiner Assistant Financial Examiner Assistant Financial Examiner Assistant Financial Examiner

From left to right (seated): Jim Mixon, Joyce Jones, John Sonnier
From left to right (standing): Natalie Holder, Frankie Keeling, Susan Andrews, Sue Ann Tucker, Alicia Ashley, Terry Tucker, Peter Crowley, Virginia Riddick, James Johnson
Not pictured: Amy Lee

Southwest District 5 - Tifton
217 Main Street Tifton, GA 31794-4834 Phone: (229) 382-6604 Fax: (229) 382-6434

2010 Annual Report

Page 12

SUPERVISORY DIVISION
SUMMARY OF ACTIVITIES FOR 2010

The Supervisory Division regulates and examines banks, credit unions, and trust companies chartered by the State of Georgia. The Department also has regulatory and/or licensing authority over subsidiaries of state-chartered banks, bank holding companies conducting business in Georgia, and international banking organizations. We share regulatory responsibility for Georgia state-chartered financial institutions with our federal counterparts (FDIC, FRB, and NCUA).
Major activities and challenges during the year included:
Took possession of 15 banks pursuant to the Official Code of Georgia, Section 7-1-150(a) which authorizes the Department in its discretion to take possession of the business and property of any state-chartered financial institution whenever such financial institution is either insolvent or operating in an unsafe or unsound condition. The depositors of the 15 state-chartered banks closed in 2010 were largely unaffected, as acquiring institutions stepped forward to service those customers. Refer to Page 15 of this Report for a listing of the state-chartered banks taken into receivership during the year.
Performed 154 safety and soundness examinations and targeted visitations of banks and 52 safety and soundness examinations of credit unions during the year.
Began development of an "early warning system" that includes surveillance, research and policy functions to identify and mitigate material risk conditions of state-chartered financial institutions.
Began implementation of a new tracking mechanism for examination reports in process. Transitioning to the new tracking reports will allow the Department to better and more efficiently manage our exam workflow and to better communicate with our federal counterparts regarding joint examinations.
Approved one new bank charter application in 2010. Financial institutions continued to take advantage of online, expedited processing procedures for corporate filings to establish branch offices, relocate branch offices, renew representative offices and expand credit union fields of membership.
Approved one application for conversion of a federal credit union to a state charter during 2010. In addition, the state-chartered corporate credit union, formerly know as Georgia Central Credit Union, converted to a federal charter during the year.
Restructuring of Depository Financial Institution Supervision Division: In order for the Department to better operate within budget and efficiently fulfill its mission and supervisory responsibilities, the Department undertook a restructuring of its Supervisory Division. Effective December 31, 2010, the Department began operating with one less district - (District 3, College Park). The vast majority of community banks that were assigned to that district now fall under District 2, Loganville.
(Continued on page 14)

Page 13

2010 Annual Report

SUPERVISORY DIVISION SUMMARY OF ACTIVITIES FOR 2010
The responsibility for the oversight of SunTrust and the credit unions formerly in District 3 now fall under District 1, Woodstock; while the oversight of Synovus Bank now falls under District 5, Tifton. Supervisory Manager assignments/ workloads were also redistributed to best align knowledge, skills, and experience.
NOTE: Effective June 30, 2011, the Savannah satellite office of District 4, Southeast, will be closed. All existing personnel will remain as part of the Dublin office.
STATE-CHARTERED BANKING STATISTICS

Georgia Banks by Type of Charter
350

300 282

290

291

276

251
250
221

200

150

100
50
50
18
0 2005

44 18

42 19

39 19

36 18

2006

2007

2008

2009

State (DBF) National (OCC) Thrift (OTS)

30 17
2010

As of the end of the year, the number of state-chartered banks totaled 221, representing a net decrease of 30 or 11.95% from the previous year. This decrease was the result of:
One state-chartered bank opening for business, 16 state-chartered banks merging out of existence, and 15 state-chartered banks being closed by the Department and placed into FDIC receivership.
Even with the decrease in the number of state-chartered banks, total bank assets under the Department's supervision grew by approximately 2% during the year to total approximately $257 billion. Total deposits also grew by approximately 4% from year-end 2009.
A four-year financial performance summary for state-chartered banks can be found on Page 18 of this Report.

2010 Annual Report

Page 14

SUPERVISORY DIVISION SUMMARY OF ACTIVITIES FOR 2010

State-Chartered Georgia Banks Taken into Receivership During 2010

Name

Receivership

City

County

Date

Transaction Type

Community Bank & Trust

Cornelia Habersham 01/29/2010 Whole Bank P&A / Loss Share

Century Security Bank

Duluth

Fulton

03/19/2010 Whole Bank P&A / Loss Share

Appalachian Community Bank

Ellijay

Gilmer

03/19/2010 Whole Bank P&A / Loss Share

Bank of Hiawassee

Hiawassee Towns

03/19/2010 Whole Bank P&A / Loss Share

McIntosh Commercial Bank

Carrollton Carroll

03/26/2010 Whole Bank P&A / Loss Share

Satilla Community Bank

St. Marys Camden

05/14/2010 Whole Bank P&A / Loss Share

Crescent Bank and Trust Company Jasper

Pickens

07/23/2010 Modified Whole Bank P&A / Loss Share

NorthWest Bank & Trust

Acworth Cobb

07/30/2010 Whole Bank P&A / Loss Share

Bank of Ellijay

Ellijay

Gilmer

09/17/2010 Whole Bank P&A / Loss Share

First Commerce Community Bank Douglasville Douglas

09/17/2010 Whole Bank P&A / Loss Share

The Peoples Bank

Winder

Barrow

09/17/2010 Whole Bank P&A / Loss Share

The Gordon Bank

Gordon

Wilkinson 10/22/2010 All Deposits Acquired

Darby Bank & Trust Co.

Vidalia

Toombs

11/12/2010 Whole Bank P&A / Loss Share

Tifton Banking Company

Tifton

Tift

11/12/2010 Whole Bank P&A / Loss Share

Chestatee State Bank

Dawsonville Dawson

12/17/2010 Whole Bank P&A / Loss Share

The above chart details the Georgia state-chartered banks that were closed by the Department during 2010. In each bank closure, the FDIC was appointed as Receiver of the bank effective upon the Department taking possession.
In addition to the 15 state-chartered banks that failed, five national banks and one federal thrift also failed during 2010, for a total of 21 Georgia bank failures during the year.
Detailed information about failed banks can be found on the FDIC's website at: http://www.fdic.gov/bank/individual/failed/banklist.html. This webpage contains useful information for the customers and vendors of these banks. This includes information on the acquiring bank (if applicable), how customer accounts and loans are affected, and how vendors can file claims against the receivership.

Page 15

2010 Annual Report

SUPERVISORY DIVISION SUMMARY OF ACTIVITIES FOR 2010

Age Breakdown State:

< 5 Years

2

5 - 10 Years

4

10 - 20 Years

3

> 20 Years

6

Total Count State:

15

Age Breakdown National/Federal:

< 5 Years

1

5 - 10 Years

0

10 - 20 Years

3

> 20 Years

2

Total Count:

6

Age Breakdown Total:

< 5 Years

3

5 - 10 Years

4

10 - 20 Years

6

> 20 Years

8

Total

21

Georgia Bank Failures During 2010 Age Breakdown

38%

14%

19%

29%

< 5 Years 5 - 10 Years 10 - 20 Years > 20 Years

STATE-CHARTERED CREDIT UNION STATISTICS

There were 61 state-chartered credit unions in Georgia at year-end 2010, a decrease of four from the previous year.
The net decrease is attributed to one federal credit union converting to a state charter, one state-chartered credit union* converting to a federal charter, and four state-chartered credit unions merging out of existence during the year.
A four-year balance sheet and income statement snapshot for statechartered credit unions can be found on Page 19 of this Report.
*NOTE: The Corporate Credit Union (f/k/a Georgia Central Credit Union) converted to a federal charter during the year and is excluded from the figures in the graph to the right.

Credit Unions by Charter Type and Total Assets as of December 31, 2010

14000 12000 10000
8000 6000 4000 2000
0

$11,652
61 credit unions State Credit Unions

$4,991
92 credit unions Federal Credit Unions

2010 Annual Report

Page 16

SUPERVISORY DIVISION
SUMMARY OF ACTIVITIES FOR 2010
OTHER SUPERVISED/REGISTERED FINANCIAL INSTITUTIONS
BANK HOLDING COMPANIES A total of 241 bank holding companies were registered with the Department at the end of 2010. The Department accepted three and approved three holding company formation applications during 2010. Fifteen bank holding companies closed during the year due to the failure of their bank subsidiaries. Five new out-of-state holding companies were registered during 2010 due to entering Georgia through the acquisition of failed banks.
FOREIGN BANKING ORGANIZATIONS The number of foreign banking organizations licensed by or registered with the Department remained unchanged during the year. One International Bank Agency holds an agency license, but operates as an international representative office only. In addition, one Domestic International Banking Facility continued to be licensed and two International Representative Offices continued to be registered during the year.
TRUST COMPANIES Trust activities continue to be conducted principally by bank trust departments. There is one state-chartered nondeposit trust company in Georgia that is an independent trust company (Reliance Trust Company, Atlanta, Georgia).
REPRESENTATIVE OFFICES OF BANKS AND BANK HOLDING COMPANIES A representative office is an office established by a bank, a bank holding company, or an agent or subsidiary of either for the purpose of conducting other than a banking business, and is not considered a main office or a branch office. As of the end of 2010, there were 50 entities registered with the Department having representative offices operating in this state.

Page 17

2010 Annual Report

SUPERVISORY DIVISION STATE-CHARTERED BANK FINANCIAL SUMMARY

State Banking Performance Summary

(dollar figures in millions) Number of institutions reporting

12/31/2010 12/31/2009 12/31/2008 12/31/2007

221

251

276

291

AGGREGATE CONDITION AND INCOME DATA

Net income

(1,686)

Total assets

256,563

Earning assets

224,711

Total loans & leases

182,545

Other real estate owned

3,325

Total deposits

206,572

Equity capital

27,975

PERFORMANCE RATIOS (YTD, %)

Yield on earning assets

4.59

Cost of funding earning assets

1.10

Net interest margin

3.49

Noninterest income to avg. earning assets

1.42

Noninterest expense to avg. earning assets

3.64

Net charge-offs to loans & leases

2.79

Credit-loss provision to net charge-offs

96.52

Net operating income to average assets

-0.72

Retained earnings to average equity

-6.33

Return on assets

-0.65

Return on equity

-6.06

Percent of unprofitable institutions

52.94

CONDITION RATIOS (%)

Net loans and leases to assets

69.32

Loss allowance to:

Loans and leases

2.57

Noncurrent loans and leases

46.3

Noncurrent loans & leases to

total loans & leases

5.56

Nonperforming assets to assets

5.25

Core deposits to total liabilities

77.89

Equity capital to total assets

10.9

Core capital (leverage) ratio

8.42

Total capital to risk-weighted assets

12.96

(3,250) 252,307 219,323 179,090
2,871 198,056 25,628

125 278,744 239,822 199,159
1,874 196,565
28,380

4.73 1.63 3.10 1.54 3.86 2.80 121.67 -1.29 -12.52 -1.26 -12.19 68.13

5.67 2.50 3.18 1.50 3.44 1.28 153.23 -0.33 -4.55 0.05 0.43 50.72

69.13

70.12

2.61 40.61

1.86 46.14

6.44 5.71 71.37 10.16 7.68 12.11

4.04 3.56 60.13 10.18 8.06 11.33

2,816 266,128 236,008 200,172
748 191,737
29,276
6.88 3.48 3.41 1.55 2.98 0.36 167.69 0.92 1.66 1.06 9.69 15.12
74.34
1.16 68.71
1.69 1.55 60.38 11.00 8.28 11.17

Source : Call Report and Thrift Financial Report FDIC-Division of Insurance and Research

2010 Annual Report

Page 18

SUPERVISORY DIVISION STATE-CHARTERED CREDIT UNION FINANCIAL SUMMARY

State Credit Union Performance Summary (amounts in millions)

ASSETS: Cash & Equivalents TOTAL INVESTMENTS Loans Held for Sale
Real Estate Loans Unsecured Loans Other Loans TOTAL LOANS (Allowance for Loan & Lease Losses) Land And Building Other Fixed Assets NCUSIF Deposit All Other Assets TOTAL ASSETS

12/31/2010 12/31/2009 12/31/2008 12/31/2007

1,230 3,543
8
3,035 785
2,683 6,503
88 194
33 94 134 11,652

1,006 3,625
10
2,680 741
2,457 5,878
74 171
34 82 122 10,853

754 2,403
4
2,270 685
2,450 5,405
51 163 37 32 127 8,873

700 2,105
6
1,783 587
2,118 4,488
42 125 43 56 109 7,591

LIABILITIES & CAPITAL: Dividends Payable Notes & Interest Payable Accts. Payable & Other Liabilities TOTAL LIABILITIES Share Drafts Regular Shares All Other Shares & Deposits TOTAL SHARES & DEPOSITS Regular Reserve Other Reserves Undivided Earnings TOTAL EQUITY TOTAL LIABILITIES & EQUITY

3 42 107 152 1,099 3,005 6,104 10,208 223 (26) 1,095 1,292 11,652

4 595 101 699 905 2,775 5,273 8,953 212 (11) 1,001 1,201 10,853

4 57 104 164 757 2,674 4,088 7,519 214 (0) 976 1,189 8,873

4 48 82 133 669 2,868 2,811 6,348 199 (7) 919 1,110 7,591

INCOME & EXPENSE: Loan Income Investment Income Other Income Total Employee Compensation & Benefits Temporary Corporate CU Stabilization Expense & NCUSIF Premiums Total Other Operating Expenses Non-operating Income & (Expense) Prov for Loan/Lease Losses Cost of Funds Net Income (Loss) EXCLUDING Stabilization Expense & NCUSIF Premium NET INCOME
Total Credit Unions Reporting

399

358

342

284

60

83

119

133

131

107

84

81

156

139

128

104

24

15

N/A

N/A

158

136

176

112

(4)

(17)

4

(1)

73

75

45

25

137

175

206

212

61

47

N/A

N/A

36

32

(6)

45

61

64

67

68

Page 19

2010 Annual Report

SUPERVISORY DIVISION EXAMINATION DISTRICTS AND WORK AREAS

DISTRICT
Main Office 1 - Northwest 2 - Northeast/Central 4 - Southeast 5 - Southwest

LOCATION
Atlanta Woodstock Loganville Dublin Tifton

Main Office Location District Field Office Locations

The above map is primarily for the purpose of exhibiting geographical district boundaries based on current institution assignments. However, some districts may have institutions assigned in other areas of the state due to multibank holding companies and/or district workload and scheduling issues.

2010 Annual Report

Page 20

NON-DEPOSITORY FINANCIAL INSTITUTIONS DIVISION

NDFI is responsible for the licensing and supervision of mortgage lenders, brokers, processors and loan originators who are licensees and registrants under the law. NDFI is also responsible for the licensing and supervision of check cashers, sale of check companies and money transmitters - collectively referred to as Money Service Businesses (MSBs). The Division is headed by Deputy Commissioner for Non-Depository Financial Institutions Rod Carnes.

ROD CARNES Deputy Commissioner for Non-Depository Financial Institutions

NAME Rod Carnes, CFE Sandra Sheley, CEM Helen O'Leary Felicia Faison-Holmes Larry Shelley, CEM Janet Anderson Bob Bauguss, CFE Joel Byers, CFE Andy Reid, CFE Betty Thomas, CFE Fernando Ornelas, CFE Teresa Koeppel, CFE Deborah Long Susan Nelson Irene Harper

TITLE Deputy Commissioner for Non-Depository Financial Institutions Director for Non-Depository Financial Institutions Senior Non-Depository Financial Institutions Division Attorney Non-Depository Financial Institutions Division Attorney Supervisory Manager - Mortgage Regulation Supervisory Manager - Mortgage Licensing Senior Financial Examiner - Mortgage Senior Financial Examiner - Mortgage Senior Financial Examiner - Mortgage Senior Financial Examiner - Mortgage Financial Examiner - Mortgage Administrative Examiner - MSBs Assistant Financial Examiner - Review Applications Analyst - MSBs Applications Analyst - Mortgage

PHONE # 770-986-1371 770-986-5036 770-986-1649 770-986-1648 770-986-1372 770-986-1268 770-986-5043 770-986-1656 770-986-1310 770-986-1316 770-986-1313 770-986-1639 770-986-2810 770-986-1652 770-986-5027

From left to right: Irene Harper, Janet Anderson, Larry Shelley, Deborah Long

MORTGAGE LICENSING STAFF
The primary responsibilities of the mortgage licensing staff are to process new and renewal applications for the licensing or registration of mortgage lenders, brokers, processors, registrants and loan originators. In addition, the staff processes changes to existing licensees such as the addition and deletion of branch locations, addition or change to branch managers, change in business structure/name, change in control, change in management, changes to the surety bond, and registration of a d/b/a name. Mortgage licensing also processes state educational provider applications and their renewals.

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2010 Annual Report

NON-DEPOSITORY FINANCIAL INSTITUTIONS DIVISION Division Profile and Staff Contact Information

MORTGAGE SUPERVISION / EXAMINATION STAFF
The mortgage supervision/examination staff examines mortgage licensees for compliance and conducts mortgage fraud investigations of both licensed and unlicensed entities. Its members prepare the reports of examinations and, if administrative action is warranted, they collect and organize the supporting evidence. The division's attorneys then issue the action or forward the documentation to the Attorney General's office in preparation for an administrative hearing. The staff also works with law enforcement and prosecutors on criminal mortgage fraud and unlicensed cases.

Seated from left to right: Bob Bauguss, Joel Byers, Andy Reid
Standing from left to right: Helen O'Leary, Betty Thomas, Fernando Ornelas,
Felicia Faison-Holmes, Sandra Sheley

From left to right: Susan Nelson, Teresa Koeppel

MONEY SERVICE BUSINESSES (MSB) LICENSING / SUPERVISION STAFF
The primary responsibilities of the MSB licensing/supervision staff are to process new and renewal applications for the licensing or registration of sale of check companies, money transmitters, and check cashers. In addition, the staff handles changes in address, branch office locations and relocations, office closure notifications, contact changes, and agent updates for seller of checks and money transmitters. Also, staff members perform examinations of the licensees, prepare the report of examination, and recommend administrative action where needed.

Did you know that the Department publishes a monthly mortgage summary and a quarterly MSB newsletter to keep licensees and registrants informed?
Please visit the Publications section of our website to view past issues of our newsletters or to learn more about subscribing to any of our publications or news/press releases.

2010 Annual Report

Page 22

NON-DEPOSITORY FINANCIAL INSTITUTIONS DIVISION
SUMMARY OF ACTIVITIES FOR 2010

The Non-Depository Financial Institutions Division (NDFI) is responsible for the licensing, regulation and examination of mortgage lenders, brokers/processors and loan originators who are licensees and registrants and Money Service Businesses (MSBs) which include sale of check companies, money transmitters, and check cashers. The Department now regulates over 5,000 Mortgage Licensees and Registrants and over 1,100 MSBs.
Major activities during the year included:
Fighting mortgage fraud remained a primary strategic focus for NDFI. We continued our Risk-Focused Examination Program, which targets those involved in mortgage fraud, with great results. During the past year, the Department issued 54 Cease and Desist Orders and 12 Intent to Revoke Orders, and made referrals of cases totaling more than $10 million to other regulatory and law enforcement agencies as a result of our examinations and investigations.
According to the LexisNexisMortgage Asset Research Institute 13th Periodic Mortgage Fraud Case Report (May 2011) for 2010, Georgia is no longer ranked in the top 10 for mortgage fraud. In addition, Georgia's Mortgage Fraud Index (MFI) has fallen below 93. An MFI below 100 is significant because an MFI of 100 would indicate that the reported fraud and misrepresentation for a state is exactly what one would expect in terms of fraud rates, given the level of loan originations in that state. Although we are happy to be out of the top 10, we will continue to work with federal, state, and local law enforcement and regulatory agencies, the Georgia Real Estate Fraud Prevention & Awareness Coalition, community task forces, and the industry to fight mortgage fraud.
The division remained committed to taking action against unlicensed activity, especially unlicensed loan modification companies. Of the 54 Cease and Desist Orders issued during the year, 46 were for unlicensed activity, of which 18 were to unlicensed loan modification companies.
Under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E. Act), the division coordinated the licensing of mortgage loan originators (MLOs) through the Nationwide Mortgage Licensing System (NMLS). During 2010, NDFI received 6,525 MLO applications and licensed 4,435 MLO applicants. The Department held 182 in-house hearings for MLOs who subsequently requested a hearing after receiving notice of the Department's intent to deny their license applications. Conducting these hearings in-house saved the Department approximately $300,000 in administrative hearings cost during 2010.
NDFI continued its Risk-Focused Examination Program for MSBs. In 2010, we issued three administrative actions (two Cease and Desist Orders and one Intent to Revoke Order). Our examination program not only focuses on Georgia law and Department rules, but also ensures compliance with the Bank Secrecy Act and anti-money laundering initiatives. In 2010, we also gave presentations at MSB conventions and will continue to work closely with the MSB industry to provide training and feedback under our program.

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2010 Annual Report

NON-DEPOSITORY FINANCIAL INSTITUTIONS DIVISION SUMMARY OF ACTIVITIES FOR 2010
MORTGAGE LICENSEE AND REGISTRANT STATISTICS
Article 13 of Title 7 of the Official Code of Georgia Annotated requires all persons who transact business as a residential mortgage lender, broker, processor or loan originator to be licensed or registered with the Department, unless they are exempt.
The Department began licensing mortgage loan originators in January 2010, as required by the Secure and Fair Enforcement Mortgage Licensing Act (S.A.F.E).
At the end of 2010, active mortgage licensees and registrants totaled 5,471, representing a net increase of 3,840 or 235% from the previous year.
As indicated in the applications graph above, the licensing of mortgage loan originators resulted in a significant increase in licensees from the previous year.

2010 Annual Report

Page 24

NON-DEPOSITORY FINANCIAL INSTITUTIONS DIVISION SUMMARY OF ACTIVITIES FOR 2010
MONEY SERVICE BUSINESSES (MSB) STATISTICS
Check Cashers
The Department continued to experience a moderate amount of application activity for check casher licenses/ registrations during 2010.
During 2010, there were 261 applications for new or reinstated check casher licenses or registrations, and 157 companies either closed or did not renew their licenses during the year. This represents a net increase of 104 or 11.5% from the previous year.
Check Sellers and Money Transmitters
Since 1965, the Department has been supervising companies that sell travelers' checks and money orders to people in Georgia, and has been licensing money transmitters since 2003.
At the end of the year, 23 check sellers having over 11,000 agents throughout the state were licensed to do business in Georgia.
At the end of the year, 83 money transmitters having over 2,600 agents throughout the state were licensed to do business in Georgia.

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2010 Annual Report

LEGISLATIVE HIGHLIGHTS

The Legal and Consumer Affairs Division is responsible for providing legal advice and

legislative drafting support for the Commissioner and staff. Major 2010 highlights included:

In 2010, the Department did not sponsor a "housekeeping bill", which traditionally provides statutory clarifications. However, during the 2010 legislative session, the

JUDY NEWBERRY Deputy Commissioner for Legal
and Consumer Affairs

Department supported legislation (HB 926) which added language to O.C.G.A. 7-1-285

(c)(9) that allowed for renewing loans, consistent with safe and sound banking practices, that were within a bank's

legal lending limit at origination but which may be outside the bank's legal lending limit at renewal or restructuring.

This law change was a relatively straightforward modification to address situations in which a loan that was in

conformance with legal lending limits at the time it was made could not be readily renewed due to a decline in the

bank's statutory lending limits. Provided that no new funds are advanced on the credit and that no new borrower(s)

replaces the original borrower, the bank now has the ability to renew or restructure such loans.

As a reminder, the fact that a financial institution may renew or rework a credit under these circumstances in compliance with Georgia law is a separate issue from whether or not such lending relationship would be subject to adverse classification in a Report of Examination. Credit relationships continue to be analyzed by examiners based on their credit characteristics; collateral position; cash flow; and financial capacity and performance of the borrower. In addition, Rule 80-1-5-.01 was updated February 1, 2011, to avoid any conflict with the new language in O.C.G.A. 7-1-285(c)(9). Language in the Rule as it was written prior to the February 2, 2011, Rule change appeared to require that original loan documents allow for extensions and renewals. This limiting language was deleted from the Department's Rule as O.C.G.A. 7-1-285(c)(9) does not contain that requirement.

Department Rules were updated in 2010, as provided for by the State Administrative Practices Act, after review and consultation with interested parties and members of the industry. Highlights of 2010 rulemaking include:
Definitions were added for "control" and "capital and surplus", consistent with the Federal Reserve "Regulation O" definitions, as they relate to the combination of debt for legal lending limit purposes.
A change was made to allow all entities cashing checks to offer the customer the option of receiving a receipt instead of a strict requirement that a receipt be provided.
Changes were made to clarify assessments in cases where institutions are merged, acquired, etc.
The specific dollar charge of $30 for fingerprint cards was deleted and language was added to provide the actual dollar amount the Department is charged for the processing of fingerprint cards.
Additional language was added to clarify that if there is a conflict between federal RESPA rules and the Department's rules, a licensee will be considered to be in compliance on the state level so long as the licensee is in compliance with federal RESPA requirements.
References to the $6.50 per loan fee were updated to a $10.00 per loan fee in response to a statutory increase enacted in 2010.

2010 Annual Report

Page 26

ADMINISTRATIVE DIVISION

The Administrative Division is responsible for human resource management, budgeting, accounting services, information systems, training activities, property management, and records systems/ management. The Division is headed by Deputy Commissioner for Administration Tracy Whitesides.
Major highlights of the year included:

TRACY WHITESIDES Deputy Commissioner for
Administration

Transitioned to new electronic travel and leave systems where both of these items are completed online, reducing the need to complete paper forms. These systems allow for faster reimbursement to employees and more efficient processes.

Participated in the State Accounting Office's Payroll Shared Service project as a pilot agency. The Department
went live with this service on July 1, 2010. Also participated in the State Accounting Office Working Capital Optimization Accounts Payable transformation project as a pilot agency. The project identified opportunities within the Accounts Payable process to reduce costs to the state. This includes payment terms, automating the cash disbursement process, utilizing prompt payment discounts and recovering overpayments and unused credits.

Streamlined the revenue collection process and automated the coding of PeopleSoft fund sources for every paycode in the Department's database.

Completed the transition of the EPerformance Management review. The next plan year will see a few changes, but overall it is an effective tool for performance reviews.

Implemented several security measures to protect examiner data on laptops; Air Cards were replaced by MiFi devices which allow up to four examiners to share data securely and gain access to the internet while out on examinations; and security policies were updated to include social networking, changes to incident reporting and stronger handheld device security.

Increased the number of fees that can be paid online. The Department's website and database were modified to give
institutions and licensees not directly supervised by the Department the ability to pay their Georgia Residential Mortgage Act fees online. Also, three new online certificate websites were created to allow Money Service Businesses (MSBs) licensees/registrants and mortgage licensees/registrants to login and print their license/ registration certificates from a secure website. This allows the licensee/registrant to login at any time to retrieve and print their certificate.

Increased computer-based training and maximized access to training opportunities offered by other supervisory agencies. During 2010, three internal training classes were held and 473 computer-based training courses were completed. Examiners also attended core training classes provided by the FDIC and training courses provided by the NCUA.

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2010 Annual Report

ADMINISTRATIVE DIVISION Division Profile and Staff Contact Information

NAME Tracy Whitesides, CPA, CEM Denise Brown Rene Martin Charlene Haynie Marilyn Harris, CEIC Felicia Hedgebeth Carol Hyde Susan Brown Kaushik Mehta Sheila Ball

TITLE Deputy Commissioner for Administration Director of IT Accounting Director I Accounting Specialist Accounting and HR Specialist Network and Information Security Administrator IS Database Integrator Office Manager Support Services Officer Administrative Secretary

PHONE # 770-986-1640 770-986-1651 770-986-1641 770-986-5038 770-986-1638 770-986-1373 770-986-1383 770-986-1621 770-986-1622 770-986-1633

The primary responsibilities of the front desk/ office management staff are to provide general and clerical support to the Department' s divisions. The Office Manager serves as administrative support for the Commissioner and Senior Deputy Commissioner. The receptionist receives calls, provides general information and forwards calls as appropriate. The Support Services Officer oversees the receipt, sorting, and distribution of mail; maintains office equipment and supplies; and assists with routine repairs and preventive maintenance.

The primary responsibilities of the IT staff are to:

(1) Procure and maintain computer equipment and software (desktop, laptop, handheld, server, local area network, firewall, wide area network, etc.); and (2) Provide technical support (Help Desk) to

From left to right (1st row): Marilyn Harris, Sheila Ball, Rene Martin From left to right (2nd row): Felicia Hedgebeth, Carol Hyde, Charlene Haynie
From left to right (3rd row): Susan Brown, Denise Brown, Kaushik Mehta

Department employees. These individuals also

comprise the Department's IT Recovery Team which, in the event of an emergency situation, is responsible for

recovery of the Department's IT infrastructure and recovery and restoration of data and voice communications.

The primary responsibilities of the human resources/accounting/budget staff are to: (1) Provide and administer the functions necessary for the recruitment, training, and certification of a professional staff; (2) Manage appropriated budget funds; assuring proper accounting and tracking of revenue and expense collections; (3) Coordinate benefit and payroll transactions, records and reports, and oversight of employee benefit programs, (4) Perform all State dictated accounting functions and processes (involving payables, receivables, payroll, balancing of accounts, etc.); and (5) Manage physical property acquisition and disposition.

2010 Annual Report

Page 28

ADMINISTRATIVE DIVISION FISCAL YEAR 2010 RECEIPTS AND DISBURSEMENTS

25,000,000 20,000,000

21,428,925

20,728,180

TOTAL RECEIPTS TOTAL DISBURSEMENTS

15,000,000 10,000,000

11,078,125

11,168,601

5,000,000

-
FY2010

FY2009

FY2010 Revenues Collected

Bank Fees 69.7%

Mortgage Fees 20.1%
Credit Union Fees 5.6%
Money Service Businesses (MSB) Fees
3.1%
Holding Company Fees, 1.5%

NOTE: Revenues collected are remitted to the Office of the Treasury and Fiscal Services. The level of expenditures is subject to the state budgetary process.

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2010 Annual Report

2010 HIGHLIGHTS FROM THE
DIRECTOR OF COMMUNICATION AND PLANNING

During 2010, the Department continued its focus on customer service improvement through strategic planning initiatives that impact our external customers and our employees. Initiatives that have not been mentioned elsewhere in this report are highlighted below, along with other accomplishments and activities during the year:

CAROL WEBB
Director of Communications and Planning

The Department continued to meet the requirements for accreditation through the Conference of State Bank
Supervisors (CSBS) and the National Association of State Credit Union Supervisors (NASCUS) during 2010. These two accreditation programs identify banking and credit union departments that serve the citizens of their state by operating a capable and professional regulatory program.

The Department's strategic focus continues to be primarily on the following two areas:
Increase overall supervisory capabilities and effectiveness. Reduce mortgage fraud in Georgia.

Each year, the Department conducts annual customer service satisfaction surveys to gain feedback from the institutions and licensees/registrants under its supervision, with the goal of maintaining overall quality of service ratings of 90% or greater (this is the percent of customers rating the service they received during the year as good or excellent). The results of our customer service satisfaction surveys for our programs continued to be extremely positive for 2010.
Depository financial institutions responding to the annual survey gave the Department an overall quality of service rating of 97%. Mortgage broker and lender licensees/registrants responding to the annual survey gave the Department an overall quality of service rating of 95%. Money Service Businesses (i.e., check cashers, check sellers and money transmitters) licensees/registrants responding to the annual survey gave the Department an overall quality of service rating of 99%.
Given the challenging environment we have been operating in for the last several years, we are extremely proud of these results as well as the number of compliments our staff received through customer feedback.

In addition to the Department's internal employee recognition program, our agency
participates in the Governor's Customer Service Commendation Program, as well as the Governor's Annual Customer Service Awards Program. During 2010, IS Database Integrator Carol Hyde was awarded a Governor's Commendation for Excellence in Customer Service for going "above-and-beyond" in assisting internal and external customers.

From left to right: State Treasurer/ former CFO Tommy Hills presenting
the award to Carol Hyde

2010 Annual Report

Page 30

SUMMARY OF ACTIVITIES
FOR STATE-CHARTERED FINANCIAL INSTITUTIONS AND OTHER ENTITIES REGULATED BY, LICENSED BY, OR REGISTERED WITH
THE DEPARTMENT OF BANKING AND FINANCE DURING 2010

FINANCIAL INSTITUTION, REGISTRANT, OR LICENSEE
BANKS (including credit card banks)

Totals 12/31/2009

Opened Reg is tered Licens ed

Converted

Merged

Clos ed

Totals

Liquidated 12/31/2010

Dereg is tered

251

1

0

(16)

(15)

221

TRUST COMPANIES
CREDIT UNIONS BANK HOLDING COMPANIES (Supervised and/or Registered)

1

0

0

0

0

1

65

0

+1

(4)

0

61

(1)

248

8

0

0

(15)

241

INTERNATIONAL BANK AGENCIES

1

0

0

0

0

1

INTERNATIONAL BANKING FACILITIES
INTERNATIONAL BANK REPRESENTATIVE OFFICES

1

0

0

0

0

1

2

0

0

0

0

2

REPRESENTATIVE OFFICES

48

7

0

0

(5)

50

CHECK SELLERS

23

1

0

0

(1)

23

MONEY TRANSMITTERS

83

7

0

0

(7)

83

CHECK CASHERS

901

261

0

MORTGAGE BROKERS /

PROCESSORS, LENDERS,

1,631

4,555

0

REGISTRANTS and ORIGINATORS

0

(157)

1,005

0

(715)

5,471

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2010 Annual Report

Our Motto is: "Safeguarding Georgia's Financial Services"
Our Mission is to promote safe, sound, competitive financial services in Georgia through innovative,
responsive regulation and supervision.
Our Vision is to be the best financial services industry regulator in the country Progressive. Proactive. Service-Oriented.

Visit us on the web at: http://dbf.georgia.gov
2010 Annual Report

GEORGIA DEPARTMENT OF BANKING AND FINANCE
2990 Brandywine Road, Suite 200 Atlanta, Georgia 30341-5565
Phone: (770) 986-1633 Toll-free: (888) 986-1633 Fax: (770) 986-1654 or 1655 Email: dbfpress@dbf.state.ga.us
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