The Federal Deposit Insurance Corporation
(FDIC) has approved the assumption of all the deposits of Victory
State Bank, Columbia, South Carolina, by the newly chartered South
Carolina Community Bank, Columbia, South Carolina.
The FDIC Board of Directors issued an order
authorizing the agency to place Victory State Bank in receivership
by exercising its self-appointment powers granted by Congress in
1991. Today, the FDIC closed Victory State Bank and took possession
of the bank in its capacity as receiver.
Victory State Bank's sole office will
re-open on Monday, March 29, as South Carolina Community Bank. The
failed bank's depositors will automatically become depositors
of the assuming bank. Victory State Bank had total deposits of $11.6
million in approximately 1,500 accounts at the time of closing.
In addition, South Carolina Community Bank
will pay the FDIC a premium of $404,000 to assume $12.2 million of
the failed bank's assets. The FDIC as receiver will retain
approximately $1.7 million of the failed bank's assets for
later disposition.
Under the FDIC Improvement Act of 1991,
Congress expanded the FDIC's authority to appoint itself
receiver of insured institutions if they become critically
undercapitalized. An institution is considered critically
undercapitalized when its tangible equity capital falls below two
percent. On January 5, 1999, Victory State Bank was determined to be
critically undercapitalized. The main problems the bank faced were
poor management, excessive insider compensation, operating losses
and a burdensome volume of problem assets. The bank has been
unprofitable since 1995, and its operating losses totaled $1.3
million over the last two years.
The FDIC estimates this will be a no cost
resolution for the Bank Insurance Fund (BIF).
This is the first bank failure in the nation
since August 7, 1998, and the first bank to fail in South Carolina
since Hilton Head Bank and Trust Company, National Association,
Hilton Head Island, South Carolina, on August 30, 1991.
