Norfolk-based Bank of the Commonwealth was closed by bank regulators on Friday and sold to Southern Bank and Trust Co. of Mount Olive, N.C.
The bank’s parent company, Commonwealth Bankshares Inc., reported a loss of $33 million for the first six months of the year. Dogged by problem loans, the bank was considered critically undercapitalized by federal regulators, who in July ordered it to raise capital or find a buyer within 30 days.
Commonwealth Bankshares disclosed earlier this year that a federal grand jury was scrutinizing its lending and reporting practices and the actions of some bank officials and that securities regulators were investigating its disclosures, records, internal accounting controls and other matters. The bank said it was cooperating fully with the investigations.
Bank of the Commonwealth, which was chartered in 1971, is the second Virginia bank to fail this year. The first was Richmond-based Virginia Business Bank, a 5-year-old bank which was seized by regulators in late July and sold to Xenith Bank, also based in Richmond.
Bank of the Commonwealth had $985 million in assets, making it more than 10 times the size of Virginia Business Bank. The Norfolk financial institution had 21 branches, 17 in Virginia and four in North Carolina.
The bank was closed by the Virginia State Corporation Commission, which named the Federal Deposit Insurance Corp. as receiver. The FDIC, in turn, sold the bank to Southern Bank and Trust. All Commonwealth branches were scheduled to reopen as Southern Bank and Trust offices.
Southern Bank and Trust has more than 50 branches in North Carolina and had assets of $1.37 billion on June 30.