“We’re not going anywhere. There’s no way.” That was the position of Bank of Georgia President Pat Shepherd Monday in response to a “cease and desist” order from the Federal Deposit Insurance Corporation (FDIC) issued June 30.

Remedies for the order are already largely in place for the nearly 1-year-old report, company officials said. The FDIC in the order, as a basis for the consent agreement with the Bank of Georgia, cited 12 areas where it has reason to believe the bank has “engaged in unsafe or unsound banking practices and violations of regulations.”

CFO Lynn Gable said that BOG had already begun coming into compliance beginning in September 2008 after the bank examination that led to the June report was performed. To date, the bank is in compliance with nearly all the problem areas, he said.

“FDIC wants us to do a little better and they have the right to do that. And we’re doing it,” Gable said. “But the order implies that the bank is not managing itself properly, and we take issue with that. We had already taken care of our initiated action plan before the order was issued in June.”

Shepherd said the bank is currently in compliance, both in remediations and with timelines for corrective actions, with the majority of the FDIC “risk profile” concerns.

Those concerns included operating with inadequate policies and procedures, inadequate supervision by the board of directors, violating regulations or statements of policy, operating with an inadequate allowance for loan and lease losses, operating with an ineffective loan review program, following hazardous lending practices, operating with inadequate liquidity and funds management and operating with excessive exposure to interest rate risk.

FDIC timelines for the various action areas range from 10-60 days.

The issue of operating with inadequate capital for the current risk profile has been addressed with a target date of Sept. 30 when the process of selling $10 million in bonds is expected to be completed, Shepherd said.

The remaining FDIC concerns included sustaining operating losses, having inadequate procedures to monitor and control risks and having an excess of adversely classified assets.

Those issues, said Gable, are substantially a function of the local economy that has affected the metro Atlanta banking industry. Most metro Atlanta banks are having the same problem and most of BOG’s loans were made when times were good, Shepherd said.

“We can’t fix some of these areas until the economy improves. If people can’t make good on their loan, they can’t move it elsewhere,” Shepherd said, noting the loss in 2008 was $3.12 million, along with $5.56 million in the first half of 2009.

“I think it’s possible to turn to profitability in the fourth quarter, maybe in the third quarter, though it won’t show a profit for the year. We’re not going anywhere. We’re not going to fail. There’s no way.”

Gable and Shepherd said since that the bank’s inception nearly a decade ago loans went primarily to support the local residential housing market that has been thriving for years.

They said the BOG loan business was geared primarily to support the front-end of the building and construction industry in Fayette and Coweta counties rather than the back end where home mortgages are purchased.

Gable added that the bank has made no sub-prime residential loans.

Gable in a statement Monday summed up the bank’s position, both on the FDIC order and on the recession-primed collapse of the local construction industry.

“The FDIC issues enforcement actions as a way to get a bank to conduct business differently to reduce its ‘risk profile.’ The bottom line is our business is primarily oriented to support the building and construction industry in our area. We are a reflection of the communities we serve,” Gable said.

“Many builders and developers have been devastated by the real estate downturn. As a result, we have repossessed many properties and have several loans that are not earning interest. The FDIC issued the order to make sure we do not make additional real estate loans and to define a plan to reduce our exposure to this industry,” Gable said.

“On our own we initiated many initiatives to accomplish these objectives and we are ahead of the FDIC’s mandates. The Bank of Georgia has been a well-managed bank for many years and we will emerge from this downturn as a stronger bank. We do not need the interference from the FDIC. However, due to the insurance coverage of our deposits, we must follow their order until this downturn is over.”

The cease and desist order is listed on the FDIC website at www.fdic.gov.

Owned by Georgia Bancshares, Inc., the Bank of Georgia board of directors includes the following:

• Shepherd — BOG president, 30 years in banking and former board member of sales and marketing of the Mid-West Georgia Homebuilders Assoc.

• Donnie H. Russell — owner and president of manufactured housing sales company Parham Industries, Inc., director and part-owner of manufactured home production company Signal Homes and an organizer and director of Fayette County Bank and Atlanta’s Commerce Bank.

• Charles R. Ogletree (no information provided on the holding company’s website).

• Malcolm R. Godwin — served in the financial industry since 1977 at Wachovia Bank, Peachtree National Bank, Fayette County Bank, and at BOG as executive vice president.

• Arlie C. Aukerman — former chairman and president of construction firm A.C. Aukerman and former Fayette County Bank director.

• Fayette County Commission Chairman Jack Smith — a Peachtree City certified public accountant.

• Thomas G. Sellmer — former owner of real estate management and investment company Sellmer Property Management and former vice president of Southern Screen & Embroidery, Inc.

• Vincent M. Rossetti — president of Ravin Homes, Inc., manager of real estate and office management firm MiRome, LLC, served on the board of Peachtree Regional Hospital, former president of Mid-West Georgia Homebuilders Assoc. and a current director of Fayette County Family YMCA.

• William Robert Hancock, Jr. — partner in Glover & Davis law firm in Newnan, partner in real estate firm F&H Investment, former advisory board member of First Union National Bank, former chairman of Newnan Development Authority and currently serves on the board of directors of Newnan Hospital.

• Rick A. Duncan — more than 25 years in banking, current BOG executive vice president and senior loan officer, formerly with C&S National Bank, Tara State Bank, Fayette County Bank and Regions Bank.

• Board Chairman Enrico A. Stanziale — former owner and president of chemical resistant coatings manufacturer Amacor, Inc. and former chairman of Fayette County Bank.