Atlantic Southern Bank (ASFN) Gets Cease and Desist From FDIC

Yesterday, on Thursday September 17, 2009, Atlantic Southern Bank (ASFN) reported in an 8k filing that it entered into a Stipulation and Consent to the Issuance of an Order to Cease and Desist with the Federal Deposit Insurance Corporation and the Georgia Department of Banking and Finance.

Here are my two previous posts on Atlantic Southern:

• August 20, 2009 – What’s the Point of Shorting a Sub-Four Dollar Stock?
• August 8, 2009 – Could Atlantic Southern Go the Way of Security Bank?

In a meeting with the president of a small private, community bank in Georgia last week, I was told that 48% of the banks in Georgia are under some kind of order from either the FDIC and/or Georgia Department of Banking and Finance. Now we can add Atlantic Southern to that list.

This recent development confirms my suspicions regarding Atlantic Southern and I maintain my belief that chances are extremely good that Atlantic will fail sometime in the next two years unless it can raise additional capital.

Here is Atlantic Southern’s Mission Statement as copied from its web page:

Atlantic Southern Bank endeavors to be a high performance community bank, providing shareholders with a fair return on their investment and giving our communities a bank that is dedicated to improving the quality of life.

Our mission can best be accomplished by applying sound banking principles in corporate decision-making and by providing our customers a degree of highly personalized, professional service that is unmatched in the markets we serve.

It seems to me that Atlantic Southern has failed miserably. A truer Mission Statement would read as follows:

Atlantic Southern Bank is a low performance community bank, providing shareholders with a negative return on their investment and giving our communities a bank that is dedicated to improving the quality of life.

Our mission has been accomplished by applying unsound banking principles…

If I were a shareholder, I would definitely be asking managers and directors to step down and I would also be asking why since December of last year they haven’t purchased shares of the bank they claim to be so high performance. Well, I think the answer to why no insider has purchased shares at the current discounted price is pretty obvious now: the insiders have no confidence and I think the insiders knew at the beginning of this year that regulators would soon be in their offices and the insiders knew that there would eventually be a cease and desist.