The Collapse of a Community Bank
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Like many local banks, CB&T was tempted during the boom years by the money to be made in real estate. From 2006 to 2008, its bets on real estate development ballooned from $338 million to $563 million — more than half of all its loans. By 2009, its commercial-real-estate loans alone equaled 657% of its capital, well above FDIC guidelines. Around the same time, according to the FDIC, a series of weaker leaders took over, headquarters stopped checking the loans its officers were peddling and the bank failed to keep accurate records, classifying home loans as business loans and vice versa and losing key data like collateral-property addresses and historical loan payments. By 2009, shortly before the FDIC swooped in, 26.3% of all CB&T loans, the equivalent of $300 million, were past due.