Decisions on Bank Applications

Community Bank & Trust - Habersham

FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: Community Bank & Trust - Habersham Cornelia, Georgia

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.

Competition

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 County residents.

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 Reinvestment Act.

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 Corporation;

2. That all necessary and final approvals be received from other regulatory authorities; and

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
Executive Secretary