State regulators closed a bank on each coast Friday, bringing the failure tally this year to 73.
The two failures, in Virginia and California, are expected to cost the Deposit Insurance Fund $305.5 million.
The Virginia State Corporation Commission closed the $985.1 million-asset Bank of the Commonwealth in Norfolk. The $1.3 billion-asset Southern Bank and Trust Co. of Mount Olive, N.C., entered into an agreement with the Federal Deposit Insurance Corp. to acquire $924.3 million of the failed bank's assets and assume its $901.8 million of deposits. The FDIC said it would retain the remaining assets for disposition. The FDIC also reached a loss-share arrangement with Southern Bank on $798.2 million of the assets.
The bank had been battling credit problems since 2009, and nonperformers made up roughly 20% of assets at June 30. Commonwealth Bankshares Inc., the bank's holding company, warned in July that the Federal Reserve Board had given it until the end of that month to return the bank to adequately capitalized status. It said it had hired two investment banks — FIG Partners LLC of Atlanta and McKinnon & Company Inc. of Norfolk, Va., — to help it find ways to boost capital.
Bank of the Commonwealth's failure is expected to cost the insurance fund $268.3 million.
Later in the evening, the California Department of Financial Institutions closed the $288.8 million-asset Citizens Bank of Northern California in Nevada City. Tri Counties Bank in Chico, Calif., agreed to buy the failed bank's assets and assume the bank's $253.1 million of deposits.
That failure is expected to cost $37.2 million.
