ATLANTA — The Georgia Department of Banking and Finance announced Friday evening that it has taken possession of what was once one of the biggest minority-owned banks in the country, Capitol City Bank & Trust Company, and appointed a Raleigh bank as receiver.
This is the third U.S. bank to fail this year, and the first in Georgia since July.
The insolvent Capitol City had headquarters in Atlanta but had branches in Augusta and Savannah, which are included in the transaction. Its founders said it was created in 1994 primarily to serve the inner-city African-American community. In 2011, it was ranked as the ninth-largest minority-owned bank in the country by Black Enterprise Magazine.
First Citizens Bank & Trust Company of Raleigh, N.C., had the winning bid to begin operating the bank and its branches Saturday this morning, and customers should notice little difference. All checks, automatic teller machines and other instruments should operate as though there has been no change, according to state regulators.
“All deposits will be transferred to First Citizens Bank & Trust Company and, therefore, it is not anticipated that there will be any loss exposure to former Capitol City Bank & Trust Company depositors that have deposits exceeding the ($250,000) FDIC Deposit Insurance amounts,” the department announced.
Customers might not feel any pain, but the Federal Deposit Insurance Corporation estimates the cost to its insurance fund will be $89 million. But it says compared to other alternatives, this is the least costly.
“Depositors of Capitol City Bank & Trust Company will automatically become depositors of First Citizens Bank & Trust Company,” the federal agency announced. “Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of Capitol City Bank & Trust Company should continue to use their current branch until they receive notice from First Citizens Bank & Trust Company that systems conversions have been completed to allow full-service banking at all branches of First Citizens Bank & Trust Company.”
When the year ended, the failed bank had assets of $272 million and $263 million in total deposits, making it a relatively small among Georgia banks. First-Citizens agreed to purchase all of the assets.
The takeover will eventually give customers access to 566 branches in 18 states, including 31 in Georgia. First Citizens is publicly traded and has $30 billion in assets.
“Our company’s stability, strength and solid capital levels have allowed us to make these types of transactions,” said Frank B. Holding Jr., chairman and chief executive officer of First Citizens Bank. “We assure customers of Capitol City Bank & Trust that their deposits are safe, sound and readily accessible, and we are dedicated to being a valued partner.”
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