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Federal Reserve Bank of Atlanta

2009 Annual Report

Southeast Banking
in the Financial Crisis

The Federal Reserve Bank of Atlanta is one of twelve regional Reserve
Banks in the United States that, together with the Board of Governors
in Washington, D.C., make up the Federal Reserve System—the nation’s
central bank. Since its establishment by an act of Congress in 1913, the
Federal Reserve System’s primary role has been to foster a sound financial system and a healthy economy.
To advance this goal, the Atlanta Fed helps formulate monetary policy,
supervises banks and bank and financial holding companies, and provides
payment services to depository institutions and the federal government.
Through its six offices in Atlanta, Birmingham, Jacksonville, Miami,
Nashville, and New Orleans, the Federal Reserve Bank of Atlanta serves
the Sixth Federal Reserve District, which comprises Alabama, Florida,
Georgia, and parts of Louisiana, Mississippi, and Tennessee.

Federal Reserve Bank of Atlanta 2009 Annual Report

Southeast Banking in the Financial Crisis

Letter from the President
The Story of the Year in Southeast
Banking Is Both Complex and Simple
Sixth Federal Reserve District Directors
Sixth Federal Reserve District Officers


Letter from the President
Following the turmoil of late 2008 involving very large financial institutions and the
interbank market, many banks experienced a year of upheaval and financial pressure in 2009. Home foreclosures, commercial real estate revaluations, and a range of
other credit quality problems came to a head for many financial institutions despite
encouraging signs that the financial system as a whole had stabilized and a deep and
protracted recession was finally coming to an end.
This year’s annual report examines how many smaller and midsized banks in
the Southeast responded to a series of real estate problems exacerbated by severe job
losses, slumping household incomes, and widespread business uncertainty.
Financial and economic challenges in the Southeast were magnified by the high
concentration of real estate investment in a region that had grown accustomed to
strong population and income growth. For many years leading up to the recent recession, builders and developers profited from favorable demographic and economic
trends for Sunbelt states. In-migration, homebuilding, and associated manufacturing
industries like furniture, textiles, and household appliances fueled growth, and the
Southeast had consistently outpaced the rest of the country by a range of economic
measures. Development in some coastal markets was even more robust.
But fortunes reversed, and growth in the Southeast was slower than in the nation
as a whole in 2009. Unemployment in the Atlanta Fed’s six-state region was slightly
higher than nationally. The aftermath of the housing bust has been especially challenging for southeastern banks—from small community banks to regional firms.
In 2009, forty-two banks failed in the Southeast, and Georgia led the nation in the
number of bank failures, although not in terms of assets. Nearly eighty southeastern
banks received capital infusions from U.S. Treasury Department programs, although
a few began to pay back these funds by year’s end.
To further the financial sector’s path to recovery, the Federal Reserve bolstered
troubled housing markets by purchasing large volumes of agency-guaranteed mortgage-backed securities, along with agency debt and Treasury securities. Also, the
Fed kept the fed funds rate exceptionally low, at just above zero for the entire year,
and was explicit in describing this policy. While the low fed funds rate was a macro-

Banking Issues in the Southeast


Federal Reserve Bank of Atlanta 2009 Annual Report

economic monetary policy measure, it also facilitated banks’
efforts to repair their balance sheets.
Bankers, regulators, and lawmakers in 2009 began working
toward building a better postcrisis financial system. Bankers
learned many painful lessons from the financial crisis and have
been forced back to basics. Bankers I have spoken with say they
understand the need to refocus on strengthening risk management and capital and liquidity buffers.
Regulators, meanwhile, are refining their approach to financial supervision in some notable ways. For example, the crisis
has made clear the need for greater horizontal supervision. This
approach considers interconnections among financial firms
and the ways those interconnections could affect the broader
financial system and economy. For another, supervisors are
transitioning to more forward-looking evaluations of individual
institutions’ safety and soundness.
Acting on those lessons, the Atlanta Fed began reorganizing its supervision and regulation operations. The aim is to
make the supervisory function more flexible, forward-looking,
and clear in communicating its messages and expectations to
the staff and the institutions they supervise.
On the legislative front, Congress initiated deliberations on
proposals to reform our nation’s financial regulatory structure.
A particular focus of this debate has been on preventing isolated
problems from causing broad damage to the financial system
and economy. Legislators discussed numerous and multifaceted
measures, including ideas that would alter the Fed’s duties in
banking supervision. In my view, the Fed should continue to play
a strong role in the nation’s financial supervision, not only to
help prevent and mitigate potential crises but also to effectively
serve as a liquidity provider in times of stress. Only the Fed can
act as lender of last resort because only the monetary authority
can increase the money supply in an emergency. To make sound
decisions, the lender of last resort needs intimate, hard, qualitative knowledge of individual financial institutions, their connectedness to counterparties, and the capacity of management.
At the time of this writing, the outcome of the debate on financial reform and
the resulting legislation is unclear. It is vital that the regulatory regime for the future
truly strengthens our defenses against the recurrence of financial crises.

Dennis P. Lockhart, president and
chief executive officer

Dennis P. Lockhart


The Story of the Year in Southeast
Banking Is Both Complex and Simple
Although the sources of the crisis were extraordinarily complex and numerous, a fundamental cause was that many financial firms simply did not
appreciate the risks they were taking. Their risk-management systems were
inadequate and their capital and liquidity buffers insufficient. Unfortunately,
neither the firms nor the regulators identified and remedied many of the
weaknesses soon enough.
—Federal Reserve Chairman Ben Bernanke, December 2009

The year 2009 was one of stabilization for the financial system and recovery for the
U.S. economy. Yet in the Southeast the banking system fared worse than in previous
years and worse than banks in most other regions. This annual report examines what
happened to southeastern banks, explores causes of the problems, and assesses
factors that will shape the future of banking institutions in the region.
The story told is both complex and simple. The financial crisis associated with
the economic downturn that began in 2007 resulted from highly complicated and
interrelated factors. These factors include growth in the market for mortgage-backed
securities and complex investment instruments, unusually large amounts of leverage by households and financial institutions, deterioration in risk management by
financial institutions, the growth of off-balance sheet activities by many banks
and of the unregulated “shadow” banking system, a flawed business model for the
housing-related government-sponsored enterprises, regulatory issues, and the global
savings glut. (See the sidebar “Fannie Mae and Freddie Mac: Past, present, and
future” on page 6.) Scholars will likely spend years untangling the root causes. At the
same time, the problems for most troubled southeastern institutions were straightforward, involving real estate.
This report does not delve into the numerous issues that brought on the larger
financial crisis but instead focuses on reasons for the problems that plagued many


Federal Reserve Bank of Atlanta 2009 Annual Report

small and midsized banks in the Southeast. In this report, “Southeast” refers to the
states of Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee in
their entirety.
The immediate problem that damaged many southeastern banks was essentially
that many banks lent heavily to builders and developers before it became clear that
the Southeast’s long jobs-and-building boom was ending. In some cases, institutions strayed from their own guidelines concerning asset allocation by taking on a
heavy concentration in real estate loans (see chart 1). In addition, corporate governance may on occasion have been too lenient or even absent. Finally, at many of the
troubled institutions, much of the lending was funded not by traditional deposits but
by more volatile and sometimes more expensive brokered deposits.
The general operating assumption that prevailed in financial institutions before
the crisis was that the population influx would continue, buyers would keep snapping up speculative houses, and therefore developers and builders would make
profits, repay their bank loans, and borrow more money to build more houses to
accommodate the growing population. But this virtuous circle eventually broke.
When it did, financial regulators by many accounts did not move aggressively enough
to anticipate the downward cycle or its scope and depth. In retrospect, bank examiners found themselves with tools that proved inadequate. Neither the guidance on
commercial real estate lending nor separate guidance concerning nontraditional
mortgage products included specific limits on those activities. Likewise, neither
guidance included minimum capital requirements.
For banks in the Southeast, the consequences have been stark. Three performance measures make this clear:
Failures: Seven banks in the six states of the Southeast failed during 2008 and
forty-two failed in 2009, after only two failures in the previous five years.
Earnings: After amassing cumulative profits exceeding $50 billion from 2002
through 2007, FDIC-insured financial institutions based in the six states lost
$8 billion in 2009 and $8.8 billion in 2008, according to data compiled by the Federal Deposit Insurance Corporation (FDIC) from bank call reports.
Loan quality: At the end of 2009, the region’s financial institutions reported a
combined $4.4 billion in loans ninety or more days past due, more than triple the
amount at the end of 2006 and six times the level at the end of 2004. Southeast
banks ended 2009 with $29.7 billion in assets no longer accruing interest, eleven
times the amount at the end of 2006.

Bank Failures in Georgia
Chart 1

ChartBank1 Loans Portfolios - Exposure through Q4 2009
Bank loan portfolio exposure




Rest of nation


Before the recession, an economic boom
These numbers evidence a dramatic reversal. In the years preceding the financial
crisis, vigorous economic growth had created a robust banking environment across
much of the Southeast. Indeed, rapid population and job growth powered the regional
economy. The population of the Southeast had more than doubled since 1960, reaching 46.2 million and far outpacing growth in the country as a whole. Florida’s population alone grew nearly 300 percent, to 18.3 million, while the nation’s population
increased by 68 percent. Florida and Georgia were among the nation’s most prolific
jobs machines before the economic downturn began in 2007. In total, the region created 5.3 million net jobs during the decade and a half (see chart 2 on page 7).

All loans secured by real estate
Comercial and industrial loans
(including agricultural loans for small banks)
Credit card
Other consumer
All other loans and leases
Note: Data are through the fourth quarter of 2009.
Source: Bank call reports


Source: Bank call reports, 2009 Q4

Fannie Mae and Freddie Mac: Past, present, and future
Editor’s note: This is an excerpt from Atlanta Fed economist W. Scott Frame’s
April 2009 working paper, “The 2008 federal intervention to stabilize Fannie
Mae and Freddie Mac,” available online at
paper_ 2009-13.cfm.
Fannie Mae and Freddie Mac are government-sponsored enterprises that play a central role in U.S. residential mortgage markets. In recent years, policymakers became
increasingly concerned about the size and risk-taking incentives of these two institutions. In September 2008, the federal government intervened to stabilize Fannie Mae
and Freddie Mac in an effort to ensure the reliability of residential mortgage finance
in the wake of the subprime mortgage crisis. This paper describes the sources of
financial distress at Fannie Mae and Freddie Mac, outlines the measures taken by
the federal government, and presents some evidence about the effectiveness of these
actions. Looking ahead, policymakers will need to consider the future of Fannie
Mae and Freddie Mac as well as the appropriate scope of public sector activities in
primary and secondary mortgage markets.  u

Real estate as a percentage of
net loans and leases in three
southeastern states:
· Florida—70 percent in 1999 to
a high of 80 percent in 2008
· Georgia—67 percent in 1999 to
a high of 87 percent in 2009
· Alabama—62 percent in 1999
to a high of 74 percent in 2006
and 2007
Source: FDIC


This expansion fueled demand for housing, retail centers, office space, and other real
estate. Low interest rates and easy access to credit furnished the ideal backdrop for
rapid residential and commercial real estate development. Consequently, real estate
lending proliferated, and new banks opened across the southeastern region to join
with existing institutions.
On average, a financial institution opened in the Southeast almost every week from
2000 through 2007, for a total of 327 new banks. Most of them were in Florida, Georgia,
and Tennessee (see chart 3 on page 7). Between 2001 and 2007, these three states ranked
second, third, and fifth among all states in bank and thrift formations. More than 60 percent of those new institutions were chartered by state banking departments. The region
in total was home to 26 percent of the nation’s new bank and thrift formations during
these years, according to the FDIC. Though this figure may seem high, it is not far out of
line with the growth of the region, as the Southeast accounted for 22 percent of the nation’s population increase in those years, according to Census Bureau estimates.
The abundant financing helped to feed the building boom. Among Georgia’s
FDIC-insured institutions, CRE lending increased almost eight times from 1999 to
the end of 2007, according to FDIC data. Florida-based banks’ loans to buy land and
build increased about five times during the period 1999–2006 (see chart 4 on page 9).
At the same time, many banks based outside of Florida entered that market to take
advantage of the real estate development boom, a move that further fueled increases
in credit and development in the Sunshine State.
Residential developers put the money to use. According to the U.S. Census
Bureau, Florida developers applied for 959,948 housing permits from 2003 through

Federal Reserve Bank of Atlanta 2009 Annual Report


2006, more than the number of permits applied for in the entire country in the year
2008. The drop in Florida permit requests from 2005 to 2009 was dramatic, falling
from a peak of 287,250 down to 35,329. In metropolitan Atlanta, the Southeast’s
fastest-growing metro area before the recession, officials issued an average of about
68,000 residential building permits each year from 2000 through 2006 (see chart 5 on
page 9). To lend some perspective, the entire city of Tallahassee, Florida, has a little
more than 68,000 housing units, according to U.S. Census data.
Recession brings a new reality
The Southeast’s banks rode the crest of this economic wave through the 1990s and
early 2000s, interrupted only by the 2001–02 recession. But as this most recent
crisis halted and then reversed the region’s once-spectacular job growth, residential
development outstripped demand. Perhaps nowhere were the effects of slowing job

2 2 employment
Payroll employment












Source: U.S. Bureau of Labor Statistics
Chart 3 New banks established in three southeastern states, 2000-07

3 Numbers are in $thousands.
Source: U.S. Bureau of Labor Statistics
New banks established in three
Alabama states,








Note: The total number of new banks established in the Southeast
during this period was 327, including 28 in Alabama, 6 in Louisiana,
and 7 in Mississippi.
Source: FDIC

Note: The total number of new banks established in
the Southeast during this period was 327, including
28 in Alabama, 6 in Louisiana, and 7 in Mississippi.
Source: FDIC

The region’s many “pipe farms” are visual
evidence of the sudden drop in housing
construction in 2008.


Too big to fail
Atlanta Fed economist Larry D. Wall republished in April 2010 an article originally
published in 1993 on the Federal Deposit Insurance Corporation Improvement Act
of 1991 (FDICIA). The paper, “Too big to fail: No simple solutions,” says that the
intent of the legislation was to reduce taxpayers’ exposure to financial system
losses, including their exposure to too big to fail financial institutions. Wall notes
in a new preface to the article that the recent financial crisis demonstrated that too
big to fail has still not been eliminated for the very largest banks.
While too big to fail has not directly affected the Sixth District, the negative effects from
the national issue have cast their shadow on us here in the Southeast. The article is
available online at  u

Relatively new
banks were also hit
particularly hard.
Among forty-nine
southeastern institutions that failed
in 2008 and 2009,
twenty-two were less
than ten years old.


growth more apparent than in Florida. As of December 2009, the state had shed
roughly 920,000 jobs since its peak nonfarm employment in March 2007, according
to the Bureau of Labor Statistics. With fewer jobs to pursue, fewer people moved to
the state. In an astounding turnabout, from July 2008 to July 2009, more people left
Florida than arrived, according to U.S. Census data. It was the first twelve-month
period in sixty-three years in which Florida lost population.
The effect of slowing in-migration on the Southeast’s homebuilding industry
was sobering. So-called “pipe farms” littered places like metro Atlanta. (The term
“pipe farms” refers to land that developers had graded and planted PVC pipes in for
subdivisions that they would now never build.) The inventory of the area’s partially
developed vacant lots soared from a twenty-one months’ supply during 2005 to more
than ten years’ worth by the end of 2008, according to a Federal Reserve Inspector
General’s report on a failed metro Atlanta bank. Eighteen to twenty-four months
is considered an acceptable inventory. Housing construction came to a virtual
standstill during 2009. For instance, in metropolitan Atlanta, builders secured
6,533 construction permits, down from a peak of 74,007 in 2004.
The heavy concentration in real estate lending became problematic for many of
the region’s financial institutions. As the hammers and saws fell silent, the Southeast
shouldered a disproportionate share of bank failures. The region’s forty-two failed
institutions in 2009 accounted for 36 percent of the nationwide total, which is more
than double its share of U.S. banks. In terms of assets, the region’s banking institutions at the end of 2009 accounted for 6.7 percent of the total assets of all FDICinsured institutions nationally.
The state of Georgia led the nation in bank failures in 2008 and 2009, with
twenty-five failed institutions in 2009 and five in 2008. Three-fourths of them
were based in metropolitan Atlanta. Most of Georgia’s failed banks were relatively
small, with less than $1 billion in assets. Relatively new banks were also hit
particularly hard. Among forty-nine southeastern institutions that failed in 2008

Federal Reserve Bank of Atlanta 2009 Annual Report

Chart 4
Cumulative construction and land development loans

Chart 4
Cumulative construction and land development loans






Of $29.7 billion in assets not
accruing interest at the Southeast’s FDIC-insured institutions
at the end of 2009, $27.3 billion,
or 92 percent were secured by
real estate.








Note: Numbers are in $billions, and are from FDIC-insured institutions based in the Southeast.
Source: Chart

Building permits in the Southeast

Note: Numbers are in $billions, and are from FDIC-insured institutions based in the Southeast.

Year–over–year percent change

Building permits in the Southeast

Source: FDIC















Source: U.S. Census Bureau

Census Bureau
were less than ten years old. Fifteen of these were based in
The small
size ofMississippi
the Southeast’s failed institutions did not pose systemic risks
of the kind associated
with much larger financial institutions that failed or required substantial public aid. However, the sheer number of failures often unsettled communities
and bank customers and imposed a cumulative cost to the FDIC deposit insurance fund
(DIF) of more than $3 billion, according to FDIC estimates as of March 2010. Among the
recent bank failures in the Southeast, only two had assets of more than $10 billion, and
neither was close to the so called “too-big-to-fail” range (see the sidebar “Too big to fail”
on page 8). Thus, the too-big-to fail conundrum has not been predominant in this region.

Real estate loans falter
By the end of 2009, loans secured by real estate accounted for 82 percent of assets
that were ninety or more days past due at FDIC-insured institutions headquartered


Who regulates whom?
Different types of banking organizations in the United States are chartered and regulated by different federal and state agencies.
The Federal Reserve (“The Fed”) is the primary supervisor for bank holding companies, including financial holding companies; state Federal Reserve-member banks;
Edge and Agreement corporations; and state-licensed foreign banks operating in the
United States, along with foreign banks’ representative offices in the United States.
The Office of the Comptroller of the Currency (OCC) charters, supervises, and
regulates national banks and federally licensed foreign banking operations in the United
The Federal Deposit Insurance Corp. (FDIC) is the primary federal supervisor
and regulator of nonmember state banks, some savings banks, and certain state
licensed and federally licensed foreign banks.
The Office of Thrift Supervision (OTS) supervises and regulates thrift holding
companies, savings banks, and savings and loan associations.
States also maintain financial regulatory agencies that supervise state-chartered
banks and certain other state-licensed financial institutions such as insurance companies and nonbank lenders.
The National Credit Union Administration (NCUA) charters, supervises, and
insures federal credit unions.
The following table is a breakdown of institutions headquartered in the Sixth Federal
Reserve District, as of December 31, 2009:
Entity type
Primary regulators
National banks
Federal savings banks
Savings and loan associations
State-chartered member banks
Fed, FDIC, States
State-chartered nonmember banks
State-chartered savings banks
States, FDIC
State credit unions
States, NCUA
Federal credit unions


2009 failures

Federal Reserve Bank of Atlanta 2009 Annual Report

in the Southeast. Those problem real estate loans amounted to 3.6 percent of total
equity capital. That figure is more than triple both the level of troubled real estate
loans at the end of 2006 and the amount relative to capital.
Florida-based institutions carried the highest level of real estate assets ninety
days-plus past due relative to capital, at 4.85 percent. Louisiana banks had the lowest
level of problem real estate assets compared to capital: 1.68 percent. Georgia
institutions as a group showed the largest three-year increase: 325 basis points
(see chart 6).
Reviews: Real estate caused most failures
For each bank failure resulting in an FDIC payout exceeding the greater of $25 million
or 2 percent of an institution’s assets, the inspector general (IG) of the responsible
regulatory agency must examine the causes of failure and issue a material loss review

Chart 6

loans 90 days past due
Southeastern loans 90 days past due








Notes: Numbers are in $millions, and are from Institutions based
in the Southeast.
Notes: Numbers are in $millions, and are from Institutions based in t
Source: FDIC

Source: FDIC

The Atlanta Fed took several measures in
2009 to keep the foreclosure crisis in its
sight, including tapping into the Real Estate
Analytics team, planning the Real Estate
Research blog to cover foreclosure issues and
other real estate topics, enhancing the bank’s
online foreclosure resources for consumers,
and launching the Foreclosure Response
podcast series. (Go to


They conclude that
the foreclosure crisis
was primarily driven
by the severe decline
in housing prices...
not by a relaxation of
underwriting standards on which much
of the prevailing literature has focused.


(MLR). (The federal regulatory agencies are the FDIC, the Federal Reserve, the Office
of the Comptroller of the Currency [OCC], the National Credit Union Administration
[NCUA], and the Office of Thrift Supervision [OTS]. See the sidebar “Who regulates
whom?” on page 10.) As of the end of January 2010, the IGs had issued MLRs on nineteen southeastern institutions that failed in 2007, 2008, and 2009. These MLRs almost
invariably identify excessive real estate lending as the primary cause of failure.
Several themes run through the reports. In many cases, as already noted, failed
institutions violated their own guidelines regarding both management and board of
directors’ oversight of operations and how much of their portfolio could be devoted
to any single industry or category. The IG reports attest that a few failed institutions
falsified information in call reports that they filed with regulators.
Not surprisingly, the most common thread among the MLRs is a focus on problems related to real estate lending. Eighteen of the nineteen MLRs cite inadequate risk
management of a heavy concentration in real estate lending as a primary cause of failure. This excerpt from a Federal Reserve IG review of a Georgia institution is typical:
“The risks associated with the ADC [land acquisition, development, and construction]
portfolio were magnified by the speculative nature of the residential construction loan
component; 93 percent of these loans were made to builders for constructing homes
that were not pre-sold.” The bank’s own internal policy, the IG report adds, limited
such loans to 60 percent of the residential construction loan portfolio.
Another MLR, this one from the FDIC’s Office of Inspector General, says a
Florida institution “failed primarily due to bank management’s aggressive pursuit
of asset growth concentrated in high-risk CRE loans with inadequate loan underwriting and a lack of other loan portfolio and risk management controls.”
Other missteps plagued banks
Some institutions encountered different types of real estate lending difficulties. For
example, a Georgia lender that specialized in loans to redevelop low-income neighborhoods relied too heavily on appreciation in property values at the expense of sound
underwriting practices, according to an MLR by the U.S. Treasury Department’s Office
of the Inspector General (see the sidebar “Depreciation or bad underwriting?” on
page 13). In the report, the IG cites examples of loans originated “with no consideration of borrower credit-worthiness,” including one to a borrower made days after he
left prison for mortgage fraud.
In another Treasury Department MLR, the inspector general describes how
a failed Florida bank installed a relative of the owner as CEO in 2004. This relative had no experience running a bank. As CEO, he directed an aggressive growth
strategy relying on high-risk products. Even as the bank incurred operating losses, it
continued paying dividends to its holding company. The holding company’s majority
shareholders were the bank owner and his family.
Regulators also come in for criticism
Bank managers and directors are not the only parties faulted for their role in the
financial crisis. MLRs frequently report that the regulatory agencies were not forceful enough. Meanwhile, members of the Federal Reserve Board of Governors and
officials throughout the Fed conducted a critical self-examination of the Fed’s super-

Federal Reserve Bank of Atlanta 2009 Annual Report

Depreciation or bad underwriting
Editor’s note: This is an excerpt from “Decomposing the foreclosure crisis: House
price depreciation versus bad underwriting,” a September 2009 working paper by
Atlanta Fed economist Kristopher Gerardi, Boston Fed economist Paul S. Willen, and
Adam Hale Shapiro, an economist with the Bureau of Economic Analysis. The paper
is available online at
The authors, using a data set that includes every residential mortgage, purchase-andsale, and foreclosure transaction in Massachusetts from 1989 to 2008, study the dramatic
increase in foreclosures that occurred in Massachusetts between 2005 and 2008. They
conclude that the foreclosure crisis was primarily driven by the severe decline in housing prices that began in the latter part of 2005, not by a relaxation of underwriting standards on which much of the prevailing literature has focused. They argue that relaxed
underwriting standards did severely aggravate the crisis by creating a class of homeowners who were particularly vulnerable to the decline in prices. In the absence of a price
collapse, they conclude that the emergence of this new group of homeowners in itself
would not have resulted in the substantial foreclosure boom that was experienced.  u

vision and regulation function. As a result, the Fed began in 2009 to change how it
supervises financial institutions. (See the section “Unsparing self-assessments”
on page 18.)
Numerous MLRs note that regulators should have considered compelling institutions to curtail their loan concentrations in residential ADC. An FDIC material loss
review of a failed Florida de novo bank notes that even though an FDIC examiner
recommended more frequent than normal examinations, neither the agency nor state
regulators followed the recommendation of quarterly reviews. Instead, the FDIC visited
the institution three times in three years. “More timely supervisory action, directed
at the performance of [the institution’s] president/CEO, high-risk lending, weak credit
underwriting and administration practices, and the bank’s increasing risk should have
been taken as a result of the FDIC’s 2006 examination,” the review states.
An OCC material loss review on an Atlanta bank that failed in 2009 is equally
straightforward: “Until 2008, OCC’s examinations of [the failed bank] were not
adequate and allowed the bank’s risky lending practices to continue unabated.” The
IG adds that in February 2008, the OCC examiner in charge had stated that formal
enforcement action was likely needed against the institution, yet the agency did not
enter into a consent order with the bank until eight months later.
Some of the content in the MLRs is clearly critical of front-line examiners. Whether
supervisory action alone would have prevented the outcomes that occurred is less
clear. The Federal Reserve IG states in a report that circumstances at a Georgia
community bank warranted “a more forceful supervisory response.” However, the

In 2009, commercial banks in the
Southeast carried $132.7 billion
in CRE loans. Banks with assets
under $1 billion carried 42 percent,
or $55.3 billion, of these loans.
Source: Bank call reports


Chart 3
Outstanding commercial mortgage-backed securities by vintage (year) - U.S. only ($Bls)

Chart 7
Outstanding commercial mortgage-backed securities by vintage (yea­r )—U.S. only ($Bls)

Partial interest-only


Fully amortized














Source: Bloomberg

Source: Bloomberg

Smaller institutions
hold almost half of
all CRE loans, even
as they account for
only a fifth of the
nation’s commercial
banking assets . . . .


report also notes that such a response might not have mattered anyway. Given the
deteriorating real estate market, determining whether more decisive regulatory
action would have affected the bank’s subsequent decline or the failure’s cost to the
DIF was not possible, according to the review.
One reason is that federal regulatory policymakers did not issue guidance on
subprime lending and other issues until the elements that contributed to the crisis
were firmly in place. And when the crisis came, that guidance did not include specific
limits on subprime and nontraditional real estate lending. Moreover, the idea of
conducting forward-looking, “what-if” assessments of banks’ portfolios was not
instituted until the 2009 Supervisory Capital Assessment Program (SCAP), the stress
tests of the nation’s nineteen largest banking companies (see page 18).
Commercial real estate issues loom
Commercial real estate (CRE) markets were cause for continuing concern through
2009, exacerbating the problems associated with troubled real estate loans. The total
dollar value of CRE loans is considerably smaller than that of residential real estate
loans. The CRE market is important to commercial banks, however, especially those
with less than $10 billion in assets. Total CRE debt in the country amounts to a third
of residential mortgage debt, but banks hold a far greater portion of overall commercial real estate debt than residential, in part because investors the world over hold
substantial securitized residential mortgage debt (see chart 7). Commercial banks,
in fact, hold about 40 percent of all CRE debt in the form of whole loans, Atlanta
Fed President Dennis Lockhart noted in a November 2009 speech. That amounts
to roughly $1.4 trillion on banks’ books. Smaller institutions hold almost half of all
CRE loans, even as they account for only a fifth of the nation’s commercial banking
assets, according to bank call report data. The FDIC reports that southeastern banks
with assets under $1 billion held forty-two percent of the region’s total CRE loans.
The recession weakened these CRE portfolios. Simply put, job losses and a
slowing economy sapped demand for CRE, leaving more office space, warehouses,
shopping centers, hotels, apartments, and condos empty across the Southeast. In

Federal Reserve Bank of Atlanta 2009 Annual Report

turn, rental rates fell, reducing cash flows for building owners and making it more
difficult for them to service bank debt. This problem could become even more significant. From 2010 through 2012, tens of billions of dollars in commercial mortgages
will be up for renewal by banks. In many cases, those properties will be worth less
than they were when the loans were made, introducing new challenges to the already
stressed smaller banks as well as the CRE market.
Some Southeast real estate markets saw signs of equilibrium toward the end of
2009. As unsold condo units and apartment vacancies mounted, builders began taking out far fewer multifamily construction permits. Throughout the Southeast, the
number of apartment and condo building permits issued declined on a year-over-year
basis in every month from April 2006 through 2009. In addition, inventory was being
absorbed more quickly as prices fell and supplies leveled off. For example, sales of
existing condos in Florida in December 2009 were 91 percent higher than in December

A national real estate slump following a
development boom in the Southeast has
left the region’s landscape dotted with
empty retail space.


Chart 6
Commercial real estate vacancy rates

Chart 8
Commercial real estate vacancy rates

Vacancy rates (percentage)














Source: CBRE Econometric Advisors, Axiometrics Inc.

Source: CBRE Econometric Advisors, Axiometrics Inc.

Returning to a Healthy Banking System

In looking ahead to 2010, the
FDIC sees improving conditions for many banks, but
also projects that there will be
substantially more bank failures through at least the third
quarter of 2010. These are lagging results of the difficulties in
commercial real estate loans.
For more information, go to http://


2008, albeit at an 18 percent lower median sale price, according to the Florida Association of Realtors. The same dynamic of higher year-over-year sales at lower prices
held in every month of 2009 in the Sunshine State, though the price declines were
smaller later in the year.
Problems lingered in other sectors even as the condo market showed some signs
of stabilizing. Some Southeast markets still had substantial numbers of apartment
units under construction as 2009 ended. Atlanta, Nashville, and Tampa all had more
than 2,500 apartment units “in the pipeline” at year end, according to F.W. Dodge
Pipeline/CBRE Econometric Advisors. Meanwhile, elusive job growth, along with
competition from distressed homes and condos whose owners gave up on selling and
decided to rent their properties, also hurt apartment markets.
Vacant office space also proliferated. The construction boom early in the decade,
followed by pervasive job losses in 2008 and 2009, sent vacancy rates climbing. By
the end of 2009, seven southeastern markets—up from just three a year earlier—had
vacancy rates above 20 percent.
Much the same story played out in industrial real estate. Vacancies across the
Southeast began to climb in late 2007 and early 2008. At the same time, development
slowed and rents declined, forces that continued through the end of 2009.
Similarly, retail vacancies rose throughout 2009. In many cases, shopping centers were nearly empty shells as nearby planned subdivisions were never finished.
In the fourth quarter of 2009, twenty-six of the region’s twenty-eight largest markets
saw retail vacancy rates climb compared to the year-ago period, according to REIS, a
commercial real estate research firm (see chart 8).
These indicators of CRE market weakness are a concern to banks, and problem
CRE loans could hinder smaller banks’ role in the economic recovery. These banks
may have to set aside larger reserves as a cushion against troubled CRE assets. That
action could, in turn, limit the amount of credit they can make available to the
numerous small businesses that rely on them for financing. With credit tight for small
businesses, then, their ability to grow and hire would be limited, undermining one
engine of economic recovery.

Federal Reserve Bank of Atlanta 2009 Annual Report

However, at this writing, some evidence exists that many small firms are not
taking on new bank loans. A December 2009 Atlanta Fed survey of 206 small businesses in the Southeast found that nearly half of respondents had not sought a loan
or line of credit from a bank in the past six months. The reason they cited most was
uncertain sales prospects. Of those businesses that sought credit, about 60 percent
said they were able to obtain all or most of the bank financing they requested. Not
surprisingly, construction firms had the most difficulty. Seventy percent of those that
sought credit were unable to secure it. It is important to keep in mind that survey
respondents represented established, relatively successful firms.
It is true that the CRE problem does not appear to threaten the broader financial
system despite tight credit and underwater CRE loans. The size of CRE debt, as noted,
is smaller than that of residential real estate, and the exposure is more concentrated in
smaller banks, whose failure does not pose a systemic threat. Nevertheless, CRE debt
adjustment and resolution is an important element in economic rebuilding, in large
part because of the ripple effect on small banks and the businesses that rely on them.
Recognizing this fact, the Federal Reserve and other financial regulatory agencies in October 2009 updated longstanding guidance regarding the workout of CRE
loans. The new statement calls for a balanced and pragmatic approach to CRE loan
workouts and examiner loan classifications, consistent with accurate and timely
recognition of losses. The guidance is intended to promote supervisory consistency,
enhance the transparency of CRE workout transactions, and ensure that supervisory
policies and actions do not inadvertently limit credit availability to sound borrowers.
Properly done, such workouts are often in the best interest of both the institution
and the borrower. According to the updated guidance, financial institutions that
undertake prudent loan workout arrangements after thorough reviews of borrowers’ financial conditions will not be subject to criticism for these efforts, even if the
restructured loans have weaknesses that cause adverse credit classifications.
Signs of improvement emerge
In 2009, the goal of both banks and their regulators was to try to regain stability.
They worked to bolster banks’ capital and enhance liquidity and made some progress. Measures of capital firmed up. Late in the year, signs that the worst of loan
quality problems could be easing in the Southeast’s banks were evident. Indeed, the
functioning of interbank and other short-term funding markets improved considerably, interest rate spreads on corporate bonds narrowed significantly, prices of
syndicated loans increased, and some securitization markets resumed operation. In
addition, equity prices of banks whose shares are publicly traded increased sharply,
on net, since their low in early 2009.
Evidence also suggests that further tightening of lending standards in many
loan categories might be coming to an end. According to a January 2010 Federal
Reserve national survey of senior lending officers, commercial banks generally
ceased tightening standards on many loan types in the fourth quarter of 2009. Banks’
policies on commercial real estate lending were an exception, as large fractions of
respondents continued to tighten their CRE credit standards and terms during the
quarter. Moreover, respondents have yet to unwind the considerable tightening overall that occurred over the preceding two years  

Sales of existing condos in Florida in December
2009 were 91 percent higher than they had
been in December 2008.

A December 2009
Atlanta Fed survey of
206 small businesses
in the Southeast
found that nearly half
of respondents had
not sought a loan or
line of credit from a
bank in the past six


Regulatory reform principles
Editor’s note: The following statements are excerpted from Federal Reserve
Chairman Ben Bernanke’s speech to the Economic Club of Washington, D.C.,
on December 7, 2009. For the full text of the speech, go to
First, all systemically important financial institutions, not only banks, should
be subject to strong and comprehensive supervision on a consolidated, or firmwide, basis.
Second, when a systemically important institution does approach failure, government policymakers must have an option other than a bailout or a disorderly,
confidence-shattering bankruptcy. The Congress should create a new resolution
regime… to wind down a troubled systemically important firm in a way that protects
financial stability.
Third, our regulatory structure requires a better mechanism for monitoring and
addressing emerging risks to the financial system as a whole.  u

Credit quality also showed hints of recovery in the final months of 2009. For
example, a couple of the Southeast’s largest banking institutions reported in Securities and Exchange Commission, or SEC, filings that their volumes of new nonperforming
loans declined in the third and fourth quarters of 2009 from the previous threemonth periods.
These developments reflected a positive trend: many financial institutions were
clearing problem assets off the books and solidifying their capital bases. Several
accessed various sources of funding and raised significant new capital during 2009.
The Federal Reserve’s SCAP stress tests played a role. After SCAP results were
released in May 2009, the firms that the SCAP determined needed to raise capital
increased common equity by more than $75 billion. One of the two southeastern
firms that participated in the stress test has also repaid capital from the Troubled
Asset Relief Program, or TARP, as did a handful of smaller institutions in the region.
Depositors also appeared more comfortable, improving financial institutions’
access to core deposit funding. Concerns about the safety of their funds during the
immediate crisis of 2008 largely abated, in part because of expanded FDIC guarantees.

Lessons Learned

Unsparing self-assessments
The banking industry is striving to strengthen risk management models, tighten
underwriting standards, fortify capital positions, and regain sound health and
consistent profitability. It remains an open question, however, whether the industry
has fundamentally changed the way it operates after its most severe crisis in nearly


Federal Reserve Bank of Atlanta 2009 Annual Report

eighty years. Ongoing issues center on the strength of the nation’s economy, the
outcome of changes implemented by regulators, and legislative reforms by Congress.
Federal Reserve officials, including Chairman Ben Bernanke, have articulated a set
of principles that in their view should underlie the nation’s regulatory framework.
(See the sidebar “Regulatory reform principles” on page 18.)
Financial regulatory agencies are already undertaking what Bernanke calls
“unsparing self-assessments.” “At the Federal Reserve and other agencies, the crisis
revealed weaknesses and gaps in the regulation and supervision of financial institutions and financial markets,” Bernanke said during the February 2010 swearing-in
ceremony for his second term as Fed chairman. “Working together, the Fed staff and
the Board have made considerable progress in identifying problems and improving
how we carry out our oversight responsibilities.”

Fed Involvement in Bank Supervision

Healthier depositor confidence, resulting
in part from the FDIC’s expanded guarantees, helped replenish some of the core
deposit funding for financial institutions.


Domestically, the
Fed is implementing standards that
require banking
companies to adopt
compensation policies that link pay
to the institutions’
long-term performance and avoid
encouraging excessive risk taking.


In cooperation with other agencies, the Federal Reserve is also toughening regulations to limit excessive risk-taking and to help banks withstand financial stress.
For example, on the international level, the Fed has worked with such organizations
as the Basel Committee on Bank Supervision to increase the quantities of capital
and liquidity that banks must hold. Domestically, the Fed is implementing standards
that require banking companies to adopt compensation policies that link pay to the
institutions’ long-term performance and avoid encouraging excessive risk taking.
A multidisciplinary approach will be a central feature of the Fed’s supervision.
The Federal Reserve’s ability to draw on a range of disciplines, using economists,
market experts, accountants, and lawyers, in addition to bank examiners, was essential
to the success of SCAP. The Fed has begun using this varied expertise to augment
traditional onsite examinations with offsite surveillance programs. In these programs, multidisciplinary teams combine supervisory information, firm-specific data
analysis, and market-based indicators to identify problems that may affect one or
more banking institutions.
Perhaps most importantly, the Federal Reserve is taking a more “macroprudential” approach to bank supervision. Drawing from the Fed’s experiences in conducting
the SCAP, this industry-wide approach transcends the health of individual institutions and instead scrutinizes the interrelationships among firms and markets to
better anticipate sources of systemic financial contagion.
Do no harm
The Fed and other regulatory agencies are beginning the necessary process of
internal change. Yet there is a balance to be struck. They must take care not to
stifle lending and damage the economy as they strengthen oversight of the financial
system. To that end, in January 2010, the Federal Reserve joined the other financial
regulatory agencies in issuing a statement reassuring banks, businesspeople, and
the public that the agencies are working with the financial industry to ensure that
supervisory policies and actions do not choke off credit to sound small business
Many parties must collaborate in strengthening our financial system. Financial
institutions, regulators, and lawmakers have important roles in ensuring that lessons
learned from the crisis that began in late 2007 are applied in the service of the greater
good. How these institutions and individuals perform is critical not just to those who
make a living in the financial industry but also to the majority who depend on financial services and the nation’s larger economy.
“The country is just now emerging from a long and painful recession caused
largely by a crisis in our financial system,” Lockhart said in January 2010. “We need
to fix things, but purported reforms that weaken how the country’s economic affairs
are governed will be harmful and tough to undo.”
The Southeast’s banking industry has made progress in escaping the depths of
the crisis. As noted, prospects for longer-term, sustainable recovery in the financial
services industry and the broader economy were mixed at the end of 2009. Yet this
region boasts a historically dynamic economy. Along with a better capitalized, managed, and supervised financial sector, that dynamism should stand the people of the
Southeast in good stead in the coming years.

Federal Reserve Bank of Atlanta 2009 Annual Report

International institutions face different pressures
Dozens of overseas banks maintain a presence in the Southeast. At the end of 2009,
sixty-one foreign banking operations (FBO) were doing business in the region,
including twenty-six branches and agencies, eleven foreign-owned bank holding companies, sixteen representative offices, and eight Edge Act corporations, which hold
special charters to conduct international banking operations.
The financial crisis affected foreign banks in the Southeast, but the impact on
them was less dramatic than it was on domestic banks because of the smaller scope
of their business in the region. None failed, and very few were in severe distress. One
major reason is that heavy lending in U.S. real estate was not central to their business plans. However, some FBOs have increased their exposure as they’ve expanded
their general banking business in the Southeast.
Presence of international banking declines
The international banking presence in the Southeast has been declining for
more than a decade. In the 1980s and early 1990s, scores of Japanese and European
banks had operations in the Southeast, mainly in Miami and Atlanta. Most of those
institutions have since pulled out of the region.
More recently, though, large Spanish banks have expanded here through
acquisitions and new branch offices. These banks have found appealing buying
opportunities among troubled U.S. institutions. Acquirers can often pick up the
healthy assets and operations of problem banks at a favorable price. The Spanish
acquirers became more careful as the crisis spread. They learned from earlier deals,
in which the banks they bought had more problems than were at first apparent. The
acquiring foreign banks became more adept at taking on only healthy assets, often
through arrangements with U.S. regulatory agencies that seek buyers to preserve the
working parts of distressed institutions.
The primary risks facing FBOs in the Southeast do not change with economic
currents. Those risks involve compliance with Bank Secrecy Act provisions regarding
matters such as money laundering. Enforcing FBO compliance with Bank Secrecy
Act and anti-money laundering regulations is a primary duty of the Atlanta Fed’s
Miami-based supervisory group. That work is evolving in response to the growth of
certain FBOs. When a foreign institution’s combined U.S. assets exceed $5 billion,
a new level of supervision takes effect. This involves collaboration between the
Atlanta Fed’s international supervisory team and the group that supervises large
domestic banking organizations.  u

. . . this region
boasts a historically
dynamic economy.
Along with a better
capitalized, managed, and supervised
financial sector, that
dynamism should
stand the people
of the Southeast in
good stead in the
coming years.


2009 Milestones

Patrick K. Barron, the Atlanta Fed’s
first vice president and chief operating officer and the retail payments
product director for the Federal
Reserve System

Federal Reserve moves its paper check processing to one office
The enactment in 2003 of the Check Clearing for the 21st Century Act, or Check 21,
allowed the digitalization of checks, making check processing significantly faster
and more efficient. Before Check 21, 100 percent of the checks that the Federal
Reserve System processed were paper. Today, almost 99 percent are processed as
electronic images. The Atlanta Fed officially discontinued paper check processing in
early 2010 but continue to serve as the Reserve Banks’ location for electronic check
processing. The Cleveland Fed handles paper checks.


Federal Reserve Bank of Atlanta 2009 Annual Report

Quarter 1
• The Retail Payments Risk Forum introduced its Portals and Rails blog and
hosted the first meeting of its advisory council, bringing together diverse stakeholders to advance action to mitigate risk in the payments system.  
• The Americas Center and the Retail Payments Office sponsored a meeting with
the Center for Latin American Monetary Studies and ten central banks to discuss a framework for cross-border payment exchange between the United States
and Latin America.
• A consumer banking conference in Miami, sponsored by the Atlanta Fed, explored
the impact of access to banking in the United States and Latin America.
• Supervision and Regulation’s (S&R) Real Estate Analytics group hosted its
third annual Fed System real estate summit on data and information in support
of the federal government’s Financial Stability Plan.
Quarter 2
• The Atlanta Fed’s economic and financial education assessment initiative, conducted in partnership with the St. Louis Fed, completed a pilot study on teacherfocused economic education and adult financial literacy programs.
• Cash services from the Atlanta Fed remained a top-three performer in the Federal Reserve System, providing the highest level of production for customers.
• The bank’s Financial Markets Conference examined the challenges of measuring, managing, and regulating risk amid the development of innovative financial
• S&R staff helped conduct the Supervisory Capital Assessment Program—
“stress tests”—of the nation’s nineteen largest banking companies, including
Atlanta-based SunTrust Banks Inc. and Birmingham-based Regions Financial Corp.
• As part of the Atlanta Fed’s Fed Green five-year plan, the bank hired an inhouse
environmental coordinator to evaluate the bank’s existing green initiatives and
partner with the Green Team to develop an environmental plan that aligns with
the bank’s strategic plan.

The Miami branch opened a new monetary
museum and visitor center.

Quarter 3
• As part of the bank’s Regional Economic Information Network (REIN), the five
Atlanta Fed regional executives are using sector-specific advisory councils to
gather grassroots information on the economic performance of those sectors.
• The REIN team also introduced SouthPoint, a regional economics blog.
• The Miami Branch opened a new monetary museum exhibit and visitor center.
• The Policy and Supervisory Studies group in Supervision and Regulation hosted
the Debate and Confirm conference on commercial real estate (CRE) issues,
focusing on prospects for CRE in 2010.
• The Research Department hosted a conference that examined housing, labor,
and the economy, including foreclosure rates and the role that race and education play in neighborhood formation.


Quarter 4
The bank’s new Center for Financial Innovation and Stability sponsored a conference on regulating systemic risk, an especially timely issue in 2009.
The bank’s community and economic development unit’s growing research in
community development and consumer policy prompted the unit’s move from
S&R to the Research Department.
The bank’s Retail Payments Risk Forum hosted a conference on emerging risks
to electronic retail payments systems and consumer data.
Michael Johnson was named senior vice president over the Supervision and
Regulation Department.
The bank introduced a redesigned public Web site,, with improved
navigation and a more robust search engine.
The Real Estate Analytics team launched a new section on the bank’s Web site.

The Atlanta Fed launched its redesigned
Web site.


Throughout the year:
Three Public Affairs forums brought internationally known experts to share
economic perspectives on public policy issues, including transportation and
water pricing and conservation.
Executives and economists delivered 370 speeches to nearly 30,000 people in
69 cities across the region. Atlanta Fed officials aim to keep the public informed
about the state of the economy and the Fed’s efforts to stabilize the economy
and financial system.
From the Atlanta Fed-based Retail Payments Office, cost recovery for both
checks and ACH—automated clearinghouse—systemwide was below target, due
largely to banking consolidations, among other factors. But upcoming changes
in infrastructure will improve the cost recovery outlook.
The research team planned a new daily Web feature called the Inflation Project
to monitor inflation on a global scale and a new blog called the Real Estate
Research Blog to provide an analysis of research and commentary on topics such
as foreclosure mitigation and other housing and real estate economics issues.

Federal Reserve Bank of Atlanta 2009 Annual Report

Sixth Federal Reserve
District Directors
Federal Reserve Banks each have a board of nine directors. Directors provide economic information, have broad oversight responsibility for their bank’s operations,
and, with Board of Governors approval, appoint the bank’s president and first vice
Six directors—three class A, representing the banking industry, and three class
B—are elected by banks that are members of the Federal Reserve System. Three
class C directors (including the chair and deputy chair) are appointed by the Board
of Governors. Class B and C directors represent agriculture, commerce, industry,
labor, and consumers in the district; they cannot be officers, directors, or employees of a bank; class C directors cannot be bank stockholders.
Fed branch office boards have five or seven directors; the majority are
appointed by head-office directors and the rest by the Board of Governors.



Atlanta Board of Directors
D. Scott Davis
Chairman and
Chief Executive Officer
United Parcel Service
Atlanta, Georgia

James H. McKillop III
President and
Chief Executive Officer
Independent Bankers’ Bank of Florida
Lake Mary, Florida

Carol B. Tomé
Deputy Chair
Chief Financial Officer and
Executive Vice President
The Home Depot
Atlanta, Georgia

Rudy E. Schupp
President and
Chief Executive Officer
1st United Bank
Boca Raton, Florida

Thomas I. Barkin
McKinsey & Company
Atlanta, Georgia

Lee M. Thomas
Chairman, President, and
Chief Executive Officer
Jacksonville, Florida

Teri G. Fontenot
President and
Chief Executive Officer
Woman’s Hospital
Baton Rouge, Louisiana

James M. Wells III
Chairman and
Chief Executive Officer
SunTrust Banks Inc.
Atlanta, Georgia

Renée Lewis Glover
President and
Chief Executive Officer
Atlanta Housing Authority
Atlanta, Georgia
T. Anthony Humphries
President and
Chief Executive Officer
NobleBank & Trust NA
Anniston, Alabama


Richard G. Hickson
Chairman and
Chief Executive Officer
Trustmark Corporation
Jackson, Mississippi

Federal Reserve Bank of Atlanta 2009 Annual Report

Left to right: Humphries, Fontenot, Glover, Davis, Thomas, Tomé, Wells; not pictured: Barkin, McKillop, Schupp, Hickson



Birmingham Branch Directors
F. Michael Reilly
Chairman, President, and
Chief Executive Officer
Randall-Reilly Publishing Company
Tuscaloosa, Alabama
Bobby A. Bradley
Managing Partner
Lewis Properties LLC and
Anderson Investments LLC
Huntsville, Alabama
Samuel F. Dodson
International Union of
Operating Engineers Local 312
Birmingham, Alabama
Maryam B. Head
Ram Tool and Supply Company Inc.
Birmingham, Alabama


Macke B. Mauldin
Bank Independent
Sheffield, Alabama
C. Richard Moore Jr.
Chairman, President, and
Chief Executive Officer
Peoples Southern Bank
Clanton, Alabama
Thomas R. Stanton
Chairman and
Chief Executive Officer
Huntsville, Alabama

Federal Reserve Bank of Atlanta 2009 Annual Report

Left to right: Stanton, Bradley, Mauldin, Reilly, Dodson, Head, Moore



Jacksonville Branch Directors
Linda H. Sherrer
President and
Chief Executive Officer
Prudential Network Realty
Jacksonville, Florida
Jack B. Healan Jr.
Amelia Island Company
Amelia Island, Florida
H. Britt Landrum Jr.
President and
Chief Executive Officer
Landrum Human Resource
Companies Inc.
Pensacola, Florida
Alan Rowe
President and
Chief Executive Officer
First Commercial Bank of Florida
Orlando, Florida


Wendell A. Sebastian
President and
Chief Executive Officer
GTE Federal Credit Union
Tampa, Florida
Ellen S. Titen
E.T. Consultants
Winter Park, Florida
Lynda L. Weatherman
President and
Chief Executive Officer
Economic Development Commission
of Florida’s Space Coast
Rockledge, Florida

Federal Reserve Bank of Atlanta 2009 Annual Report

Left to right: Weatherman, Landrum, Titen, Sherrer; not pictured: Healan, Rowe, Sebastian



Miami Branch Directors
Gay Rebel Thompson
President and
Chief Executive Officer
Cement Industries Inc.
Fort Myers, Florida

Dennis S. Hudson III
Chairman and
Chief Executive Officer
Seacoast Banking Corporation
of Florida
Stuart, Florida

Leonard L. Abess
Chief Executive Officer
City National Bank of Florida
Miami, Florida

Eduardo J. Padrón
Miami Dade College
Miami, Florida

Walter Banks
Lago Mar Resort and Club
Fort Lauderdale, Florida

Thomas H. Shea
Chief Executive Officer
Florida/Caribbean Region
Right Management
Fort Lauderdale, Florida

W. Cody Estes Sr.
President and Owner
Estes Citrus Inc.
Vero Beach, Florida


Federal Reserve Bank of Atlanta 2009 Annual Report

Left to right: Hudson, Abess, Padrón, Thompson, Banks, Shea; not pictured: Estes



Nashville Branch Directors
David Williams II
Vice Chancellor and
General Counsel
Vanderbilt University
Nashville, Tennessee
Rich Ford
Hylant Group of Nashville
Nashville, Tennessee
Daniel A. Gaudette
Retired Senior Vice President
North American Manufacturing
and Supply Chain Management
Nissan North America Inc.
Smyrna, Tennessee
Cordia W. Harrington
President and
Chief Executive Officer
Tennessee Bun Company
Nashville, Tennessee


Dan W. Hogan
President and
Chief Executive Officer
Fifth Third Bank, Tennessee
Nashville, Tennessee
Debra K. London
Retired President and
Chief Executive Officer
Mercy Health Partners
Knoxville, Tennessee
Paul G. Willson
Chairman and
Chief Executive Officer
Citizens National Bank
Athens, Tennessee

Federal Reserve Bank of Atlanta 2009 Annual Report

Left to right: Ford, Williams, Gaudette, London, Willson, Hogan; not pictured: Harrington



New Orleans Branch Directors
Robert S. Boh
President and
Chief Executive Officer
Boh Bros. Construction Company LLC
New Orleans, Louisiana
Gerard R. Host
President and
Chief Operating Officer
Trustmark National Bank
Jackson, Mississippi
R. King Milling
Member, Board of Directors
Whitney Holding Corporation and
Whitney National Bank
New Orleans, Louisiana
Christel C. Slaughter
SSA Consultants LLC
Baton Rouge, Louisiana


Matthew G. Stuller Sr.
Chairman and
Chief Executive Officer
Stuller Inc.
Lafayette, Louisiana
José S. Suquet
Chairman, President, and
Chief Executive Officer
Pan-American Life Insurance Group
New Orleans, Louisiana
Anthony J. Topazi
President and
Chief Executive Officer
Mississippi Power
Gulfport, Mississippi

Federal Reserve Bank of Atlanta 2009 Annual Report

Left to right: Host, Boh, Topazi, Slaughter, Stuller, Suquet, Milling



Sixth Federal Reserve District Officers
Management Committee
Dennis P. Lockhart
President and
Chief Executive Officer
Patrick K. Barron
First Vice President and
Chief Operating Officer
David E. Altig
Senior Vice President and
Director of Research
Research Division


Christopher G. Brown
Senior Vice President and
Chief Financial Officer
Corporate Services Division
Anne M. DeBeer
Senior Vice President
Corporate Services/
Financial Services Division

Federal Reserve Bank of Atlanta 2009 Annual Report

Left to right: Oliver, Berthaume, Brown, Lockhart, Herr, Jones, Gooding, Barron, DeBeer; not pictured: Altig, Estes

William B. Estes III
Senior Vice President
Supervision and
Regulation Division
Marie C. Gooding
Executive Vice President
and Corporate Engagement Officer
Frederick R. Herr
Senior Vice President
System Retail Payments Office

Richard R. Oliver
Executive Vice President
System Retail Payments Office
Lois C. Berthaume
Senior Vice President and
General Auditor
Auditing Department
Richard A. Jones
Senior Vice President and
General Counsel
Legal Department



Other Officers
Scott H. Dake
Senior Vice President
James M. McKee
Senior Vice President
Robert J. Musso
Senior Vice President and
Regional Executive
New Orleans
Donald E. Nelson
Senior Vice President
William J. Tignanelli
Senior Vice President
Andre T. Anderson
Vice President

Brian D. Egan
Vice President
J. Stephen Foley
Vice President
Amy S. Goodman
Vice President
New Orleans
Cynthia C. Goodwin
Vice President

John S. Branigin
Vice President

Lee C. Jones
Vice President and
Regional Executive

Michael F. Bryan
Vice President

Mary M. Kepler
Vice President

Suzanna J. Costello
Vice President

Robert A. Love
Vice President

Thomas J. Cunningham
Vice President and
Associate Director of Research

Mary M. Mandel
Vice President

Leah L. Davenport
Vice President


Juan del Busto
Vice President and
Regional Executive

Bobbie H. McCrackin
Vice President and
Public Affairs Officer

Federal Reserve Bank of Atlanta 2009 Annual Report

Christopher L. Oakley
Vice President and
Regional Executive
Cynthia L. Rasche
Vice President
John C. Robertson
Vice President
Melinda J. Rushing
Vice President
Juan C. Sanchez
Vice President
Robert M. Schenck
Vice President
David E. Tatum
Vice President
Adrienne M. Wells
Vice President
Julius G. Weyman
Vice President and
Regional Executive

David J. Christerson
Assistant Vice President
Michael Chriszt
Assistant Vice President
Chapelle D. Davis
Assistant Vice President
Robert A. de Zayas
Assistant Vice President
Angela H. Dirr
Assistant Vice President and
Assistant General Counsel
Gregory S. Fuller
Assistant Vice President
Paul W. Graham
Assistant Vice President
Todd H. Greene
Assistant Vice President
Robert D. Hawkins
Assistant Vice President

Christopher N. Alexander
Assistant Vice President

Carolyn Ann Healy
Assistant Vice President

William B. Bowling
Assistant Vice President

Janet A. Herring
Assistant Vice President

Joan H. Buchanan
Assistant Vice President and
Corporate Secretary

Kathryn G. Hinton
Assistant Vice President

Annella D. Campbell-Drake
Assistant Vice President

Susan Hoy
Assistant Vice President and
Assistant General Counsel


Amelia L. Johnson
Assistant Vice President

Adrienne L. Slack
Assistant Vice President

Bradley M. Joiner
Assistant Vice President

David W. Smith
Assistant Vice President

Evette H. Jones
Assistant Vice President

Maria Smith
Assistant Vice President

Jacquelyn H. Lee
Assistant Vice President

Timothy R. Smith
Assistant Vice President and
Community Relations Officer

Stephen A. Levy
Assistant Vice President
Margaret Darlene Martin
Assistant Vice President
Daniel A. Maslaney
Assistant Vice President
Marie E. McNally
Assistant Vice President
Elizabeth McQuerry
Assistant Vice President
Annita T. Moore
Assistant Vice President

Clifford S. Stanford
Assistant Vice President
Allen D. Stanley
Assistant Vice President
Jeff Thomas
Assistant Vice President
Joel E. Warren
Assistant Vice President
Charles L. Weems
Assistant Vice President

D. Pierce Nelson
Assistant Vice President and
Public Information Officer

Kenneth Wilcox
Assistant Vice President

Doris Quiros
Assistant Vice President and
Assistant General Auditor

Christina M. Wilson
Assistant Vice President

Susan L. Robertson
Assistant Vice President

Stephen W. Wise
Assistant Vice President

Jeffrey F. Schiele
Assistant Vice President


Phillip Mark Sparks
Assistant Vice President


In 2009, the Board of Governors engaged Deloitte & Touche LLP (D&T) for the audits
of the individual and combined financial statements of the Reserve Banks. Fees for
D&T’s services are estimated to be $9.6 million. Approximately $2 million of the
estimated total fees were for the audits of the limited liability companies (LLCs)
that are associated with Federal Reserve actions to address the financial crisis and
are consolidated in the financial statements of the Federal Reserve Bank of New
York.1 To ensure auditor independence, the Board of Governors requires that D&T be
independent in all matters relating to the audit. Specifically, D&T may not perform
services for the Reserve Banks or others that would place it in a position of auditing
its own work, making management decisions on behalf of Reserve Banks, or in any
other way impairing its audit independence. In 2009, the Bank did not engage D&T
for any nonaudit services.

Each LLC will reimburse the Board of Governors for the fees related to the audit of
its financial statements from the entity’s available net assets.


The 2009 Federal Reserve Bank of Atlanta
Annual Report was created and produced
by the Public Affairs Department.
Vice President and Public Affairs Officer
Bobbie H. McCrackin
Assistant Vice President and
Public Information Officer
Pierce Nelson
Publications Director

Atlanta Office
1000 Peachtree Street, N.E.

Lynne Anservitz

Atlanta, Georgia 30309-4470

Graphic Designer and

Birmingham Branch

Art Director

524 Liberty Parkway

Peter Hamilton

Birmingham, Alabama 35242-7531


Jacksonville Branch

Charles Davidson

800 West Water Street

William Smith

Jacksonville, Florida 32204-1616


Miami Branch

Nancy Condon

9100 N.W. 36th Street

Lynn Foley

Miami, Florida 33178-2425


Nashville Branch

Flip Chalfant

301 Rosa L. Parks Avenue

Brad Newton

Nashville, Tennessee 37203-4407


New Orleans Branch


For additional copies contact
Public Affairs Department
Federal Reserve Bank of Atlanta
1000 Peachtree Street, N.E.
Atlanta, Georgia 30309-4470

525 St. Charles Avenue
New Orleans, Louisiana 70130-3480