- The Washington Times - Friday, April 10, 2009

NEW YORK (AP) - Federal regulators shut down two more banks Friday, raising the number of bank failures so far this year to 23.

The first bank was Cape Fear Bank in Wilmington, N.C., the first North Carolina bank to fail in nearly 16 years. The other bank was New Frontier Bank of Greeley, Colo., the second Colorado bank this year to collapse.

The Federal Deposit Insurance Corp. took over both banks Friday after their respective state regulators closed them down.

The FDIC did not tap a buyer for New Frontier Bank, and instead created the Deposit Insurance National Bank of Greeley. The FDIC named San Francisco-based Bank of the West to manage the entity, which will stay open for about 30 days to give New Frontier Bank’s customers time to open accounts at other insured institutions.

New Frontier Bank has $2 billion in assets and $1.5 billion in deposits, $4 million of which potentially exceeded the insurance limits. Regular deposit accounts are insured up to $250,000.

The FDIC was able, however, to sell Cape Fear Bank to First Federal Savings and Loan Association of Charleston in Charleston, S.C. On Monday, Cape Fear Bank’s eight branches will reopen as First Federal branches.

First Federal is assuming all of Cape Fear Bank’s $403 million in deposits and buying about $468 million of its $492 million in assets. The FDIC will retain the rest of the assets to sell later.

The most recent Colorado bank to fail was Colorado National Bank in Colorado Springs on March 20 of this year. But North Carolina has not seen a bank go under since Crown National Bank of Charlotte in May of 1993.

This year’s tally of 23 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.

A growing number of banks are becoming insolvent as home prices fall and unemployment rises, causing more individuals and businesses to default on their debt.

The FDIC estimated that the closure of Cape Fear Bank will reduce the federal deposit insurance fund by $131 million, and that the closure of New Frontier Bank will lower it by another $670 million.

As of the end of 2008, the insurance 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 about $65 billion through 2013.

The FDIC fund operates by charging financial institutions, not with federal tax dollars. The agency has been increasing 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.


New Frontier Bank customers with questions can call the FDIC at 800-830-4705. Cape Fear Bank customers with questions can call the FDIC at 800-806-6128.

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