Credit crisis costs tiny rural county its only bank

The national credit crisis has had less impact on rural banks, because they generally have more conservative lending and investment policies. (For one example, the Bank of Eastern Oregon, see this story by George Murdock of the East Oregonian.) But in some cases where rural banks were bought to serve as tools for cashing in on the real-estate boom, the chickens have come home to roost. They did last week in Gibson, Ga., population 700, where the only bank in Glascock County, population 3,000, closed its doors. (Encarta map)

"To Glascock County residents, it now seems as if the crisis has extended a tentacle from Atlanta to their quiet community of farms and sawmills 120 miles to the east, where “sprawl” is something one does in the den after work," Shaila Dewan writes for The New York Times. Her story is more than a rural news feature; First City Bank was so weak that the Federal Deposit Insurance Corp. couldn't find another bank to take it over, only the second such case in 48 bank failures since 2007.

"Most of the bank’s money came from “brokered deposits,” investments obtained from third parties that shop around for the highest rates, rather than more reliable “core deposits,” which come from local customers," Dewan explains. (Read more)