Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, August 14, 1993 TAG: 9308140201
SECTION: VIRGINIA PAGE: C-3 EDITION: METRO
SOURCE: Associated Press
DATELINE: NORFOLK LENGTH: Medium
The bank closed on Thursday because regulators were not satisfied with its capital. New Atlantic Bank's $15.3 million in deposits were assumed by the Bank of Hampton Roads, which is based in Chesapeake.
All New Atlantic depositors became depositors of the Bank of Hampton Roads on Friday.
"All the depositors are being guaranteed 100 percent of their funds in the transaction," Jack W. Gibson, president of the Bank of Hampton Roads, said.
New Atlantic's only office in Norfolk is now the Bank of Hampton Roads' seventh branch. It already had four branches in Chesapeake and two in Virginia Beach.
"We're really excited" about the purchase, Gibson said. "It gives us an entry into the Norfolk market."
The Bank of Hampton Roads will pay a premium of $218,000 for the right to receive New Atlantic's deposits and will buy $7.8 million of the bank's more than $15 million in total assets.
The Federal Deposit Insurance Corporation will advance about $4.8 million to the assuming bank and will retain assets of the failed bank with a book value of about $8.3 million.
New Atlantic had only a 2 percent capital-to-asset ratio, Gibson said. That level was too low for the Office of the Comptroller of the Currency, which closed the bank and turned it over to the FDIC as receiver.
FDIC spokesman David Barr said a bank is considered to be undercapitalized when its capital sinks below 4 percent of assets.
The bank's capital had been declining because of continuing operations losses, the result of high overhead and increased provisions to the bank's loan-loss reserve, the FDIC said in a statement.
Jesse E. Fleming, New Atlantic president and chief executive officer, said the bank was solvent but didn't have enough capital to satisfy regulators.
"We were not in a negative cash position," Fleming said. "It's just that the regulators have a number you must meet, and we didn't meet that number."
New Atlantic had loans of $7.27 million as of March 31, about $410,000 - or 5.6 percent - of them were nonperforming. The bank reported a $25,000 loss in the first quarter.
Its predecessor - Atlantic National - also had problems. It was seized by government regulators in December 1989. New Atlantic opened the same month.
by CNB