Community Bank declared insolvent; FDIC named receiver

 

BRIDGEPORT — After 12 years in operation the Bridgeport-based Community Bank has been declared insolvent and shut down by state Banking Commissioner Howard F. Pitkin.

In an announcement made on Friday, September 13, Pitkin said that the Community Bank’s financial condition “was such that it would be unsafe and unsound for it to continue operations.” At the same time a court petition was filed to name the Federal Deposition Insurance Corp. (FDIC) as receiver. Each Community Bank depositor would continue to be insured by the FDIC up to the statutory $250,000 limit.

Pitkin explained that the action was necessary because of continued operating losses that have depleted the institution’s capital reserves.  Information filed with Superior Court indicated the bank had a deficit capital position of $31,000 as of June 30. For nearly a decade the Community Bank had been Connecticut’s only minority-owned bank.

“The Banking Department worked diligently to find ways to allow for the continued operation of the Community’s Bank,” said Pitkin in a statement. “Unfortunately, despite considerable efforts in seeking an acquirer or viable investor, the bank’s issues could not be resolved and my primary responsibility is to the protection of Connecticut consumers, and in this case, specifically the depositors of this institution.”

According to Pitkin the bank has been under increased regulatory scrutiny since 2010, and despite efforts to recapitalize the bank, its financial condition continued to erode.  This is the first bank failure in Connecticut since 2005.

From June 30, 2012 to June 30, 2013, the bank's assets dropped from $33 million to $26 million and its capital sank from $1.5 million to $300,000, according to the FDIC. Meanwhile its profit margin dropped from negative $244,000 to negative $1.4 million and its troubled assets rose from nearly $1.7 million to $2.1 million.

The Community’s Bank was chartered in 2001 as a Connecticut bank and trust company. It acquired three branches as a result of the divestiture of branches as part of the Fleet/Bank of Boston merger.  The branches were located in Bridgeport, Bloomfield and Hartford. The Hartford branch was closed in 2003, and the Bloomfield branch was sold in 2004 to the Windsor Federal Savings & Loan Association. That left only the original Park City branch at 1087 Broad Street.