Two More Banks Fail

FDIC pays out $131 million to cover closings

April 13, 2009

• FDIC Closes Banks In California, Florida • Failed Bank Toll Keeps Rising • FDIC Closes Nine More Banks • Bank Closings Pass 100 for 2009 • California Bank Failure Is 99th Of 2009 • FDIC: Bank Fund In The Red • Regulators Seize Atlanta's Second-Largest Bank • Chicago's Corus Bank Fails as Condo Loans Sour • Taylor Bean-Linked Platinum Bank Fails • Three More Banks Go Under • More Than 400 Banks on Endangered List as FDIC Fund Shrinks • Feds Seize Guaranty Bank of Texas, 10th-Largest Failure In U.S. History • Feds Seize Colonial Bank, 6th-Largest Failure In U.S. History • Five More Banks Fail • Two Illinois Banks Fail • Two More Banks Fail • FDIC Warns It's Running Out of Funds • Oregon Bank Fails; No. 14 This Year • Four More Banks Fail • FDIC Closes Three More Banks • Feds Seize Mortgage Lender IndyMac • FDIC Seizes West Virginia Bank, More Likely to Follow

Two more U.S. banks failed last week, raising the number of bank failures to 23 so far in 2009.

New Frontier Bank of Greeley Colorado and Cape Fear Bank of Wilmington, North Carolina were closed by their respective state regulatory agencies, with the U.S. Federal Deposit Insurance Corporation appointed as receivers for both.

To protect the depositors, the FDIC created the Deposit Insurance National Bank of Greeley, which will remain open for approximately 30 days to allow depositors time to open accounts at other insured institutions. At the time of closing, the receiver immediately transferred to the DINB all insured deposits of New Frontier, except for brokered deposits, certificates of deposit and individual retirement accounts.

Bank of the West, San Francisco, California, was contracted by the FDIC to provide operational management of the DINB. The main office and two branches of New Frontier reopened Monday, April 13, 2009.

As of March 24, 2009, New Frontier had total assets of $2.0 billion and total deposits of about $1.5 billion. At the time of closing, there were approximately $150 million in insured deposits and $4 million in deposits that potentially exceeded the insurance limits. Uninsured deposits were not transferred to the DINB. This amount is an estimate that is likely to change once the FDIC obtains additional information from these customers.

The FDIC entered into a purchase and assumption agreement with First Federal Savings and Loan Association of Charleston (First Federal), Charleston, South Carolina, to assume all of the deposits of Cape Fear Bank.

Cape Fear Bank's eight offices reopened today as branches of First Federal. Depositors of Cape Fear Bank will automatically become depositors of First Federal. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until First Federal can fully integrate the deposit records of Cape Fear Bank.

As of March 31, 2009, Cape Fear Bank had total assets of approximately $492 million and total deposits of $403 million. In addition to assuming all of the deposits of the failed bank, First Federal agreed to purchase approximately $468 million in assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and First Federal entered into a loss-share transaction on approximately $395 million of Cape Fear Bank's assets. First Federal will share with the FDIC in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers as they will maintain a banking relationship.

The FDIC estimates that the cost of the Cape Fear Bank closing to the Deposit Insurance Fund will be $131 million.

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