Bank of the Commonwealth is shut down

By on September 23, 2011

Bank of the Commonwealth was closed Friday by the Virginia State Corporation Commission, according to the Federal Deposit Insurance Corporation website.

The FDIC was appointed as receiver. To protect depositors, the FDIC entered into a purchase and assumption agreement with Southern Bank and Trust Co. of Mount Olive, N.C, to assume the deposits of Bank of the Commonwealth.

The 21 branches of Norfolk-based Bank of the Commonwealth will reopen beginning Saturday as branches of Southern Bank and Trust Co. Depositors of Bank of the Commonwealth will automatically become depositors of Southern Bank and Trust.

Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage up to applicable limits. Customers of Bank of the Commonwealth should continue to use their existing branch until they receive notice from Southern Bank and Trust that it has completed systems changes to allow other Southern Bank and Trust branches to process their accounts as well.

This evening and over the weekend, depositors of Bank of the Commonwealth can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of June 30, 2011, Bank of the Commonwealth had approximately $985.1 million in total assets and $901.8 million in total deposits. In addition to assuming all of the deposits of the failed bank, Southern Bank and Trust agreed to purchase approximately $924.3 million of the failed bank’s assets. The FDIC will retain the balance of the assets for later disposition.

The FDIC and Southern Bank and Trust entered into a loss-share transaction on $798.2 million of Bank of the Commonwealth’s assets. Southern Bank and Trust will share in the losses on the asset pools covered under the loss-share agreement.

The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, please visit:http://www.fdic.gov/bank/individual/failed/lossshare/index.html.

This marks the third bank with operations on the Outer Banks that has failed since the banking crisis became acute after the real estate-based recession of 2007. Previously, Cooperative Bank, headquartered in Wilmington, N.C. failed, as did Bank of Currituck.

Cooperative Bank’s operations were taken over by First Bank, of Troy, N.C., which is currently constructing a new retail branch in Kill Devil Hills where the former Cooperative Bank stood. Bank of Currituck’s operations were assumed by Towne Bank of Norfolk, Va., which created a new division called TowneBank of Currituck to operate the former Bank of Currituck branch locations.

Customers with questions about today’s transaction should call the FDIC toll-free at 1-800-423-6395. You can also go to the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/boc-va.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $268.3 million. Compared to other alternatives, Southern Bank and Trust Company’s acquisition was the least costly resolution for the FDIC’s DIF.

Bank of the Commonwealth is the 72nd FDIC-insured institution to fail in the nation this year, and the second in Virginia. The last FDIC-insured institution closed in the state was Virginia Business Bank, Richmond, on July 29, 2011.

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Comments

Nags Header

September 29, 2011 1:02 am

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
Thomas Jefferson

ekim

September 27, 2011 8:26 pm

I wonder if most these banks will be empty buildings in a year or 2?

junkman

September 27, 2011 4:28 pm

Too many banks ? Sounds like the free market to me. That means the good ones will survive and th others……fail. I’m sure the free market people would like less (or no) regulation and the dissolution of agencies like the FDIC etc…. Good stuff, right ?
Just imagine if everyone at Commonwealth, Community and others lost all their deposits in the failures (likely with no FDIC or regulation to discourage bad practices). Wouldn’t that be great for the OBX ? Think about it……

former obx'r

September 27, 2011 11:23 am

“So many banks on the Banks”…could the reason be that when the tourists come to visit they are impressed and think that the OBX is a prosperous place to be, so they spend more money, if they only really knew!

Bill

September 26, 2011 9:06 pm

Yea, I too have wondered why over the past few years, an influx of banks has blossomed on the OBX?! Nearly every new commercial building is a bank. First there was a Wings ever mile or so along the bypass, and now banks. Why?? I would be very curious of the business motive there…is it to make it easier for the local population to incur more consumer debt??

Stan Clough

September 26, 2011 8:17 pm

Bank of Currituk did not fail ? The whole banking system failed, where were you JohnnyB, asleep? You must work for the bank. I believe in a few years it will be realized that some scam occurred. We will be reminded about the occurrances of 2008 and the outcomes of 2011. Where is the money ?

JohnnyB

September 26, 2011 2:10 am

Russ, I just wanted to point something out. Techincally, Bank of Currituck DID NOT fail. Towne stuck a deal with Currituck to be purchased before a failure occured and therefore there was no FDIC seizure.

Elihu

September 25, 2011 2:19 pm

I know I’m not the only one who noticed all the new banks being built as foreclosures were reaching record highs. Accountability? At a financial institution? Insane.

ekim

September 24, 2011 6:15 pm

Everybody I know has at least a saving accont. If there’s no $$$$$ here why are there so many BANKS here?

HSHOBX

September 24, 2011 4:13 pm

I don’t understand the plethora of banks on the OBX. Real estate is so expensive… Island Safety is right, we have dozens of banks here and half the people I know don’t even have a bank account…

Island Safety

September 24, 2011 9:05 am

so we’re down to what, 30 different banks now? Every block of the bypass has a bank, bound to lose a couple. Not like we make any money here.

John VanderMyde

September 24, 2011 7:57 am

A pretty good argument for regulation and government / private sector partnerships. Banking should be treated as a utility – it’s not an area where any “innovation” is needed beyond improving customer service.

Selena K

September 24, 2011 7:17 am

So…they REALLY needed that giant building on the Bypass, then, huh? Pathetic. I’m sorry for the current customers and hope no one loses money, but this is not surprising. Their ostentatious construction in a recession was disgusting.

Nags Header

September 24, 2011 1:05 am

All of this name changing, shuffling . . .
The “Bank of Currituck” is now “TowneBank of Currituck”.lol
Subtle name change… bidne$$ as usual. Hmmm???

“Build another one, Cappie! And make sure you fill every sq.inch of building lot w/ it! Spare no cost! More bronze dolphin statues!!!”

/puke

p.s.- hope my post doesn’t get deleted.:S

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