January 21, 2011 – CommunitySouth Bank and Trust, Easley, South Carolina, was closed today by the South Carolina State Board of Financial Institutions, which then appointed the FDIC as receiver. The FDIC sold the failed bank to CertusBank, N.A., Easley, South Carolina. CertusBank is a newly chartered bank subsidiary of Blue Ridge Holdings, Inc., Charlotte, North Carolina, and will assume all deposits of failed CommunitySouth.
The six branches of CommunitySouth will reopen on Saturday as branches of CertusBank and all deposits will continue to be insured by the FDIC. Banking customers of CommunitySouth will have full access to their money over the weekend through checking, ATMs and debit cards.
CommunitySouth was a mid sized bank with almost half a billion in assets. The Bank, which began operations only 6 years ago aggressively expanded its lending in an overheated property market. As the economy weakened and real estate markets collapsed, CommunitySouth faced growing loan losses on defaulting loans. The Bank was the subject of an FDIC Consent Order issued in February 2010.
CommunitySouth’s website describes its history and fast growth.
CommunitySouth Bank & Trust began in January 2005, with a temporary modular office in Easley and a handful of dedicated employees.
Today, CommunitySouth has assets of over $400 million, operates six offices across the Upstate, and employs over 95 talented banking professionals.
The Bank was also awarded Business of the Month by the Greater Easley Chamber of Commerce (April 2009), and was named to the Top 25 Fastest Growing Companies in South Carolina in both 2007 and 2008 (SC Chamber/ Elliott Davis).
When you walk into any CommunitySouth office, you are treated to a Banking Unusual experience: “Banking Unusual is about doing unusual things like serving freshly-baked cookies and offering nationwide free ATMs and a free business courier service,” said C. Allan Ducker III, CommunitySouth’s Chief Executive Officer. “
CommunitySouth went public in late 2006 on the eve of the financial crisis. The stock initially traded at around $17 per share and had a market cap of $80 million. The stock of CommunitySouth Financial, the holding company for CommunitySouth Bank and Trust, closed Friday at a nickel a share.
Blue Ridge Holdings is led by former Wachovia and Bank of America executives who have raised $500 million from private investors to purchase failed banks. Just as in the last banking crisis of the 1990’s, investors purchasing failed banks today are becoming wealthy by turning around failed banks with the help of FDIC loss-share transactions.
At September 30, 2010, CommunitySouth had $440.6 million in assets. CertusBank agreed to purchase all the assets of CommuitySouth and is protected from losses under a loss-share transaction with the FDIC covering $211.3 million of the purchased assets. CertusBank did not pay the FDIC a premium for the deposits of CommunitySouth.
The estimated loss to the FDIC Deposit Insurance Fund for the failure of CommunitySouth is $46.3 million. This is the fifth banking failure of the year and the first in South Carolina.