SCC closes Bank of the Commonwealth

Published 11:21 pm Friday, September 23, 2011

The State Corporation Commission shuttered Bank of the Commonwealth branches all over Hampton Roads at the close of business on Friday. The banks will re-open today as part of the Southern Bank chain, headquartered in North Carolina.

Second one in Virginia to fail this year

The State Corporation Commission has closed the Bank of the Commonwealth, making the Norfolk-based financial institution the second bank to fail in Virginia this year.

The SCC’s Bureau of Financial Institutions and the Federal Deposit Insurance Corp. took control of the bank at the close of business on Friday, with the FDIC being named as the receiver of the institution, according to an SCC press release.

The release states that the FDIC has agreed to allow Mount Olive, N.C.-based Southern Bank and Trust Company, which does business as Southern Bank, to buy most of Bank of the Commonwealth’s assets, as well as $901.8 million in deposits.

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The bank’s branches, including one on Western Avenue in Suffolk, will re-open on Saturday morning as branches of Southern Bank, according to the FDIC. The FDIC will retain a little more than $60 million in assets for future disposition, officials said in their announcement.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $268.3 million.

Commonwealth Bank-shares, which is the parent company of Bank of the Commonwealth, has seen its financial statistics in a months-long slide, as the bank experienced operating losses, negative return on equity and negative return on assets during the past year, according to its most recent financial statements.

Since the FDIC insured all account-holders up to $250,000, regulators worked with the SCC under Virginia banking laws to close the failing bank and take charge of its books when it became clear that Commonwealth could not pull itself out of its hole, officials indicated.

The law “authorizes the Commission to close a state-chartered bank and take charge of its books, assets and affairs if the bank is found to be insolvent or if deemed necessary for the protection of the public interest,” the SCC’s press release states.

All Bank of the Commonwealth accounts were transferred to Southern Bank and will be available during business hours starting today, and depositors are not at risk of losing any money, the release stated.

Southern Bank, established in 1901, provides banking services primarily in eastern North Carolina.

According to information posted on the FDIC website after the announcement, Bank of the Commonwealth depositors will automatically have their money transferred to Southern Bank and Trust, and they should be able to continue to use their ATM cards and checks and to make loan payments to the bank as usual.

For more information, visit the FDIC’s website at Customers seeking more information can call the FDIC at 1-800-423-6395 from 9 a.m. to 6 p.m. today, from noon to 6 p.m. Sunday and from 8 a.m. to 8 p.m. beginning on Monday.

Bank of the Commonwealth is the second Virginia-based financial institution to be closed by the State Corporation Commission this year. Richmond-based Virginia Business Bank was closed in July. This is the 72nd FDIC-insured institution to fail in the nation this year, according to FDIC officials.