Friday, April 10, 2009

Failure Friday's :Cape Fear Bank becomes 22nd US bank failure of '09

NEW YORK (AP) -- Regulators have shut down Cape Fear Bank - the first North Carolina bank to collapse since 1993, and the 22nd U.S. bank to fail this year.

On Friday, the small Wilmington, N.C. bank was closed by state regulators and taken over by the Federal Deposit Insurance Corp.

First Federal Savings and Loan Association of Charleston in Charleston, S.C. was chosen to assume all of Cape Fear Bank's $403 million in deposits and buy about $468 million of its $492 million in assets. The Federal Deposit Insurance Corp., which was named receiver of Cape Fear Bank on Friday, will retain the rest of the assets to sell later.

On Monday, Cape Fear Bank's eight branches will reopen as First Federal branches.

This year's tally so far of 22 bank failures is nearing the total for all of 2008, when 25 U.S. banks were seized by regulators. Two of the nation's largest savings and loans failed that year: Washington Mutual Inc. and IndyMac Corp.

The list of bank failures keeps growing as home prices fall and unemployment rises, causing more individuals and businesses to default on their debt.

The state of North Carolina had not seen a bank failure, though, since May of 1993, when Crown National Bank of Charlotte, N.C., went belly-up.

The FDIC estimated that the collapse of Cape Fear Bank will reduce the federal deposit insurance fund by $131 million. As of the end of 2008, the fund stood at $18.9 billion - the lowest level in nearly a quarter-century, and down from $52.4 billion at the end of 2007.

The FDIC expects that bank failures will cost the insurance fund a total of around $65 billion through 2013. The agency has increased fees and premiums in an effort to replenish the fund.

At the end of 2008, the FDIC had 252 banks and thrifts on its list of troubled institutions, up from 171 in the third quarter of last year.


Cape Fear Bank customers with questions can call the FDIC at 800-806-6128.

© 2009 The Associated Press.