Magazine article American Banker

FDIC Shuts Minority Bank; Black Group Buys Deposits

Magazine article American Banker

FDIC Shuts Minority Bank; Black Group Buys Deposits

Article excerpt

WASHINGTON -

Regulators shut down South Carolina's only minorityowned bank over the weekend and sold its deposits and some assets to African-American investors.

Victory State Bank, a $14 million-asset, one-office institution in Columbia, had a capital ratio of less than 2% when it was closed by the Federal Deposit Insurance Corp. According to the FDIC, the bank was beset by "excessive insider compensation" and bad loans.

The FDIC received 14 bids for the failed institution's holdings. The winning bid was made by a group of 50 local investors, nearly all of whom are African-American. It obtained a state bank charter over the weekend and opened Monday as South Carolina Community Bank. Historically black Benedict College owns the largest chunk of the new bank, about 20%.

David H. Swinton, president of Benedict College and chairman of the new bank, said he wants to build South Carolina Community to $250 million to $500 million of assets within 10 years by reaching out to the state's "underserved" minority communities.

"We will be able to see the opportunities that other banks-who are more distant and much, much larger-are not really able to," Mr. Swinton said in an interview. "We do have a niche market and are very much interested in exploiting that niche."

Victory State was the first federally insured financial institution to fail since Q Bank of Fort Benton, Mont., in August. Tom Felder, a smallbusiness lending expert with NationsBank, will serve as the new bank's interim president until a permanent chief is named. …

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