Bank of the Commonwealth's new owner fields queries

Ann Cooley went Monday to the former Bank of the Commonwealth branch on Virginia Beach Boulevard near Rosemont Road in Virginia Beach to close an empty safe-deposit box.

The Virginia Beach resident expressed disappointment at the failure of the Norfolk-based bank but said she wasn't worried about her deposits there.

Wallace Baum of Virginia Beach also stopped in, saying he wanted to check on the status of his Christmas club account at the bank.

Teams from Southern Bank and Trust Co. helped field questions from Commonwealth customers on Monday while addressing personnel, branch and technology issues.

Southern, based in Mount Olive, N.C., bought most of Commonwealth's deposits and assets from the Federal Deposit Insurance Corp. late Friday after the bank was closed by state regulators.

Virginia's State Corporation Commission said it acted because Commonwealth's capital was "dangerously low" and "quickly deteriorating." The bank, it said, was "rapidly approaching insolvency, and no reasonable prospect for rehabilitation of Bank of the Commonwealth exists."

Southern held a lengthy meeting with former Commonwealth employees on Sunday afternoon.

"The employees seem to be relieved," said Raymond L. Smith, vice president and IT manager at Southern. "They have been super-cooperative."

Southern, however, has not yet made decisions regarding Commonwealth's employees and which of Commonwealth's 21 branches it will keep, he said. The North Carolina bank sent more than 25 of its employees to Hampton Roads last week to work on the acquisition of Commonwealth's deposits and assets, Smith said.

Raymond J. Rudnicki, a senior FDIC ombudsman, said there was no run by Commonwealth's depositors and no liquidity problems at the bank last week. Over the weekend, the volume of inquiries from its customers was modest, he said.

"Most people seem to understand the process and understand that their deposits are safe," he said.

Signs bearing the Commonwealth name were removed or covered by temporary maroon-and-white Southern Bank signs Friday night. The former Commonwealth branches reopened Saturday morning, and customers continued to have access to their accounts by means of checks, debit cards and online accounts.

The process of closing Commonwealth and lining up banks to bid on its deposits and assets began two months ago, Rudnicki said.

Last week, the FDIC dispatched 118 employees from its offices in Washington, Dallas and the Chicago area to deal with the closing and transfer of Commonwealth's deposits and assets to Southern.

Most FDIC employees will depart later in the week, but someone with the agency will continue to deal with transfer issues and possible claims against Commonwealth for another year, Rudnicki said.

Southern entered into a loss-sharing transaction with the FDIC for $798.2 million of Commonwealth's assets. The FDIC estimated that Commonwealth's failure will cost its deposit-insurance fund $268.3 million.

Commonwealth, which had been hobbled by mounting losses on its loan portfolio, had assets of $985 million at the end of June and deposits of $901.8 million. During the past three and a half years, it reported losses of more than $110 million.

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com