FEDERAL DEPOSIT INSURANCE CORPORATION
IN RE: Community Bank & Trust - Habersham
Application for Consent to Purchase Certain Assets and to
Assume the Liability to Pay Deposits and for Consent to Establish One Branch
ORDER AND BASIS FOR CORPORATION APPROVAL
Pursuant to Section 18(c) and other provisions of the Federal Deposit Insurance Act
("FDI Act"), Community Bank & Trust - Habersham, Cornelia, Georgia ("Community"),
an insured state nonmember bank with total resources of $202,384,000 and total deposits
of $175,281,000 as of June 30, 1997, has filed an application for the Federal Deposit
Insurance Corporation's ("Corporation") consent to purchase certain assets of and to
assume the liability to pay deposits made in the Clarkesville, Georgia, branch of Suntrust
Bank, Northeast Georgia, National Association, Athens, Georgia ("Suntrust"), an insured
national bank with total resources of $623,146,000 and total deposits of $476,992,000 as
of June 30, 1997, and for consent to establish that branch as a branch of Community.
Notice of the proposed transaction, in a form approved by the Corporation, has been
published pursuant to the FDI Act.
Five insured depository institutions operate a total of 17 offices in Habersham County, a
rural area in Northeastern Georgia, which has been identified as the relevant geographic
market ("RGM") for this proposed transaction. Community's main office and seven
branches are located in the RGM. The Clarkesville Branch of Suntrust, which is to be
sold to Community, is the only Suntrust branch located in the RGM. Habersham Bank,
Clarkesville, Georgia, operates its main office, two branches, and a limited service
facility in the RGM. Regions Bank, Gainesville, Georgia, operates three branches in the
RGM. United Community Bank, Blairsville, Georgia, operates one branch in the RGM.
Based on June 30, 1996, Summary of Deposits data for banks, Community and Suntrust
controlled 33.7 and 4.0 percent of RGM deposits, respectively. The proposed transaction
would increase Community's share of RGM deposits to 37.7 percent and would result in
a 271 point increase in the RGM's Herfindahl-Hirschman Index ("HHI") to a post-merger
level of 3,207.
The United States Department of Justice concluded that the proposed transaction would
not have a significantly adverse effect on competition. The Federal Reserve Bank of
Atlanta concluded that the proposed transaction could have significantly anti-competitive
effects, but advised that it did not consider all of the economic factors that may be
relevant to the competitive effects of the proposed transaction. Other federal regulatory
authorities offered no comments. The State of Georgia's Department of Banking and
Finance authority approved the proposed transaction on August 6, 1997.
The proposed transaction will reduce the number of insured depository institutions
represented within the RGM from five to four and thereby increase the level of
concentration. However, there are other important factors relevant to this case which
must be considered when assessing the competitive effect of the proposed transaction.
Suntrust intends to leave the RGM, either by selling or closing its Clarkesville branch.
The sale of the branch to an in-market competitor will be less disruptive to the
community than closing the branch. Four financially sound institutions will remain in the
RGM and it is believed that the competitive conditions will not be significantly reduced.
The proposed transaction will also allow Community to proceed with the planned
expansion of its Clarkesville operations. The post-merger HHI for the proposed
transaction is reflective of general market conditions within the State of Georgia.
After giving consideration to the factors cited above, the Board of Directors is of the
opinion that the proposed transaction will not substantially lessen competition, tend to
create a monopoly, or in any other manner restrain trade or otherwise have an adverse
competitive impact that would require disapproval under the Bank Merger Act.
Financial and Managerial Resources; Future Prospects
Community is in generally satisfactory condition with adequate capital and satisfactory
management. Future prospects appear favorable.
Convenience and Needs of the Community to be Served
The scope and convenience of banking services offered to the general public should not
be significantly affected by the proposal. Four financially sound banks will remain
within the RGM. Likewise, there are banking alternatives available in several contiguous
counties that currently provide business opportunities and retail services to Habersham
Community will provide the same services offered by Suntrust. Community plans to
retain all the Suntrust Clarkesville branch employees in order to expand customer service.
Community's close proximity to the Suntrust branch will largely eliminate any
inconvenience the customers from the closed branch may experience by having to access
their accounts at the new location. There have been no protests to the proposed
transaction from either the public or the banking community. A review of available
information revealed no inconsistencies with the purposes of the Community
The resultant institution is expected to continue to meet the credit needs of its entire
community, consistent with the safe and sound operation of the institution.
Upon consideration of all relevant material, the Board of Directors has concluded that the
application should be and hereby is approved subject to the following conditions:
1. That the transaction shall not be consummated before the fifteenth calendar
day following the date of this Order or no later than six months after the date
of this Order unless such period is extended for good cause by the
2. That all necessary and final approvals be received from other regulatory
3. That, until the proposed transaction becomes effective, the Corporation shall
have the right to alter, suspend, or withdraw its approval should any interim
development be deemed by the Board of Directors to warrant such action.
Dated at Washington, D.C., this 23rd day of September, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
Robert E. Feldman