2015 Annual report

State of Georgia
Department of Banking & Finance
2015 Annual Report

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State of Georgia
Department of Banking and Finance
ANNUAL REPORT
For Year Ending December 31, 2015
Nathan Deal Governor
Kevin B. Hagler, CEM Commissioner

Table of Contents

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

1

Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

Financial Institution Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

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

4

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

7

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

8

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

9

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

10

Non-Depository Financial Institution Supervision . . . . . . . . . . . . . . . . . . . . . .

11

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

11

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

12

Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13

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

13

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

14

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

During 2015

Message from the
Commissioner

Georgia's banking industry continued to improve throughout 2015, and bankers across the state consistently relayed a sense of renewed optimism for the future of banking in our state. Conversations have shifted from work-out solutions for problem assets, to much more positive discussions about meeting the needs of borrowers and putting deposits to work in the communities they serve. The Department's examination results reflected that positive outlook with a strong trend of ratings upgrades, particularly in the Asset Quality and Earnings CAMELS components. Examinations resulted in very few loan downgrades, and most banks have been able to clear Other Real Estate from their books with little or no negative impact. Most impressively, 41 banks received an upgrade to their composite ratings further reflecting the positive strides in the industry.

Kevin B. Hagler

As of year-end 2015, the Department regulated 159 banks, a decline of 15 charters from the prior year. This decline came partially from the closure of Capital City Bank & Trust Company, Atlanta, and The Bank of Georgia, Peachtree City; however, 13 open-bank mergers were the real driving force. A heightened level of merger activity was a nationwide phenomenon in 2015 as banks formed strategic alliances to better face the head winds of a low interest rate environment, a high level of competition among lenders, and an increased regulatory burden coming from Washington, DC. Banks also merged to create liquidity events for shareholders as demand has pent up throughout the recession. While merger activity has reduced the number of banks regulated by the Department, the total assets under supervision has continued to increase, as state chartered banks are generally larger and more complex. The Georgia Department of Banking and Finance is the 4th largest state banking regulator in the country based on total assets of $277 billion under supervision.

The Department regulates 53 credit unions, and while that number is unchanged from 2014, there was a moderate amount of merger activity present. Six (6) federally chartered credit unions merged into state chartered credit unions, two (2) state chartered credit unions merged into federally chartered credit unions, and we welcomed Robins Financial Credit Union, Warner Robins, and Southeastern Credit Union, Valdosta, to the family of state chartered credit unions. Credit union assets under supervision also continue to grow despite consolidation in the industry. The Department has $17 billion in total assets under supervision in its credit union portfolio. The credit union industry has also demonstrated positive financial performance during 2015, but shares the challenge of generating quality assets in sufficient volume to more fully deploy deposits.

The Department also has regulatory oversight of 12,625 non-depository entities. The number of mortgage loan originator licensees continues to grow significantly year over year, with 2015 resulting in a 14% increase over the prior year. We also continued to see an increase in the number of mortgage companies licensed in Georgia. The number of money service business licensees declined by 6% over the year due to a decline in the number of check casher renewals. The volume of Sellers of Payment Instruments and Money Transmitters increased modestly during the year.

Page 1

2015 Annual Report

Message from the
Commissioner
The Department's work with the Code Review Task Force, a public/private partnership with the banking industry, combined with outreach to representatives of the credit union industry as well as the non-depository industry culminated in the Department's housekeeping bill (HB 184, Bruce Williamson of the 115th) for the 2015 legislative session. The bill revised statutory provisions governing the majority of the entities regulated by the Department banks, credit unions, bank holding companies, money service businesses, mortgage companies, loan originators, and merchant acquirer limited purpose banks as well as certain provisions addressing the Department's general powers. Highlights of the legislation included clarification of the Department's ability to grant parity to state chartered banks and credit unions with their federal counterparts, and empowered the Department to place credit unions in conservatorship as a potential alternative to liquidating a credit union through a receivership.
Kevin B. Hagler, CEM Commissioner

2015 Annual Report

Page 2

Organizational Structure
The Department of Banking and Finance (Department) is the state agency that regulates and examines Georgia state-chartered banks, state-chartered credit unions, and state-chartered trust companies. The Department also has responsibility for the supervision, regulation, and examination of merchant acquirer limited purpose banks (MALPBs) chartered in Georgia.
In addition, the Department has regulatory and/or licensing authority over mortgage lenders, brokers, processors, and loan originators; check cashers; sellers of payment instruments; money transmitters; international banking organizations; and bank holding companies conducting business in Georgia.
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 Kevin B. Hagler is assisted by Senior Deputy Commissioner Steve Pleger. The Department's operations are divided along functional lines: Financial Institution Supervision, Non-Depository Financial Institution Supervision, Legal Affairs, and Administration. These divisions are headed by Deputy Commissioners.

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2015 Annual Report

Financial Institution Supervision
STATE-CHARTERED BANKING STATISTICS
As of the end of the year, the number of state-chartered banks totaled 159, representing a net decrease of 15 or roughly 8.6 percent from the previous year. This decrease was the result of two banks being closed by the Department and placed into FDIC receivership and 13 banks being merged out of existence. Total state-chartered bank assets under the Department's supervision at year-end was approximately $277 billion. A five-year financial performance summary for state-chartered banks can be found on Page 7 of this Report.

Detailed information about failed banks can be found on the FDIC's website at: https://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.

2015 Annual Report

Page 4

Financial Institution Supervision
STATE-CHARTERED BANKING STATISTICS
As shown in the table below, Georgia state-chartered commercial bank assets under supervision ranked fourth in the country at the end of 2015. NOTE: Savings banks are not included in the asset figures below.

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2015 Annual Report

Financial Institution Supervision
BANK HOLDING COMPANIES
A total of 198 bank holding companies were supervised by or registered with the Department at the end of the year.
TRUST COMPANIES
Trust activities continue to be conducted principally by bank trust departments. There is one state-chartered nondepository 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 activities other than a banking business, and is not considered a main office or a branch office. As of the end of 2015, there were 50 entities registered with the Department having representative offices operating in Georgia.
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 international banking facility continued to be licensed and two international representative offices continued to be registered during the year.

2015 Annual Report

Page 6

Financial Institution Supervision
State-Chartered Bank Financial Summar y

Page 7

2015 Annual Report

Financial Institution Supervision

STATE-CHARTERED CREDIT UNION STATISTICS

There were 53 state-chartered credit unions in Georgia at year-end 2015. During the year, two credit unions merged

out of existence and two converted from

a federal to a state charter. A five-year balance sheet and income statement snapshot for state-chartered credit

unions

can

be

found

on

Page 9

of

this

Report.

2015 Annual Report

Page 8

Financial Institution Supervision
State-Chartered Credit Union Financial Summary

Page 9

2015 Annual Report

Financial Institution Supervision
Examination Districts and Work Areas

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

LOCATION Atlanta Woodstock Loganville Dublin Ti on

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. Note: District 3 was merged into Districts 1 and 2 on December 31, 2010.

2015 Annual Report

Page 10

Non-Depository Financial Institution Supervision
MORTGAGE LICENSEE AND REGISTRANT STATISTICS
Article 13 of Title 7 of the Official Code of Georgia Annotated (O.C.G.A.) requires all persons who transact business as a residential mortgage lender, broker, processor or loan originator be licensed or registered with the Department, unless they are exempt. At the end of 2015, active mortgage licensees and registrants totaled 11,518, representing a net increase of 1,410 or roughly 14 percent from the previous year. The increase year over year continues to be largely due to continued licensing of mortgage loan originators.

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2015 Annual Report

Non-Depository Financial Institution Supervision
MONEY SERVICE BUSINESSES STATISTICS
Unless otherwise exempt, anyone that engages in the cashing of payment instruments for a fee must be licensed by the Department under Article 4A of Title 7 of the O.C.G.A. Unless otherwise exempt, anyone that engages in the sale of payment instruments or money transmission, must be licensed by the Department under Article 4 of Title 7 of the O.C.G.A. At the end of 2015, the number of money service businesses licensed by the Department totaled 1,107, representing a net decrease of 71 or roughly 6 percent from the previous year. The net decrease year over year is due to a decline in the number of renewals for check casher licenses.

2015 Annual Report

Page 12

Administration
FISCAL YEAR 2015 RECEIPTS AND DISBURSEMENTS

NOTE: Revenues collected are remitted to the Office of the State Treasurer. The level of expenditures is subject to the state budgetary process.

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2015 Annual Report

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 2015

2015 Annual Report

Page 14

Our Mission is to promote safe, sound, competitive financial services in Georgia through innovative, responsive regulation and supervision.
Our Vision is to be a willing and able partner with our regulated entities in order to support vibrant economic growth and prosperity in Georgia.

2990 Brandywine Road, Suite 200 Atlanta, Georgia 30341-5565
Phone: (770) 986-1633 Toll-free: (888) 986-1633 Email: dbfpress@dbf.state.ga.us

GEORGIA DEPARTMENT OF BANKING AND FINANCE
Visit us on the web at: dbf.georgia.gov