A minority-owned bank in Atlanta that is under orders from its regulators to add fresh capital is getting a shot in the arm from SunTrust Banks (STI).
Capitol City Bank, which is struggling to regain its footing following the real estate bust, has already received a $1 million cash infusion from SunTrust and is expecting another $3 million from Atlanta's largest bank, bank officials said.
The $4 million investment is expected to restore the $297 million-asset Capitol City to "well-capitalized" status — it is currently "adequately capitalized" — and could hasten its release from a federal enforcement order it has been operating under since early 2010. Among other things, the order requires it to boost capital levels and reduce its level of problem loans and prohibits from meaningfully growing its assets without regulators' approval.
Capitol City and SunTrust announced the partnership last week. The news was first reported by the Atlanta Journal-Constitution.
SunTrust officials said that its investment in Capitol City was the only one of its kind in a minority-owned bank. In a news release, its chairman, president and chief executive, William H. Rogers, said that Capitol City president and CEO George Andrews "shares our commitment to serving Atlantans and we are pleased to support the institution he leads as it works to meet the financial needs of the urban and minority communities in the area."
Rogers added that Andrews is a SunTrust alumnus.
Andrews said in the news release that he was grateful for SunTrust's support. The bank lost more than $700,000 last year and as of Dec. 31, nearly 12% of its loans were at least 90 days past due, according to the Federal Deposit Insurance Corp.
"If Capitol City Bank did not have enough capital to survive, our absence from the marketplace would leave a tremendous void," he said.
SunTrust is expected to receive Community Reinvestment Act credit for its investment.