Prominent black-owned Atlanta bank fails

Capitol City Bank & Trust, a historically black-owned bank in Atlanta, failed Friday after years of struggle, becoming the first bank to falter in Georgia in almost eight months.

The bank’s branches will reopen over the weekend as offices of First-Citizens Bank & Trust, of Raleigh, N.C., according the the Federal Deposit Insurance Corp., a federal agency that guarantees depositors’ money in banks.

Investors and regulators had thrown the small bank a number of lifelines, including a $1 million injection of capital from SunTrust Banks in 2012, but in the end it wasn’t enough to stanch more than $20 million in losses since 2008.

Capitol City, which had eight branches in metro Atlanta, Augusta and Savannah, was told by state and federal regulators in 2010 and 2012 to shore up finances that had been hammered by losses on soured real estate development loans.

“That’s a sad day for Atlanta,” said Chris Marinac, managing principal with FIG Partners, an Atlanta bank advisory firm. He said J.P. Morgan and Well Fargo also chipped in millions of dollars to shore up the bank, but Capitol City’s assets “just kept getting thinner” due to loan losses.

The 20-year-old bank focused on underserved areas and has had some prominent players, including well-known civil rights leader C.T. Vivian, a longtime member of the board of directors.

Capitol City is the 89th bank in Georgia to fail since mid-2008, when the rapidly mounting pace of failures made the state the nation’s bank failure capital. But the pace has slowed dramatically; only five have failed in the past two years.

Capitol City had about $272 million in assets and $263 million in deposits at the end of 2014, according to the FDIC. The FDIC estimated that Capitol City’s failure will cost its deposit insurance fund almost $89 million.

Correction: An earlier version of this story misstated the total amount of capital invested by SunTrust Banks into Capitol City Bank & Trust. In 2012, Capitol City and SunTrust announced that SunTrust committed to investing up to $4 million into Capitol City. SunTrust spokesman Mike McCoy said that full investment was contingent on the recruitment of matching funds. Ultimately, SunTrust invested $1 million.