Two More Banks FailTwo banks closed last Friday, bringing the total number of failed banks to 23 so far in 2009. The New Frontier Bank, Greeley, CO and the Cape Fear Bank, Wilmington, NC were closed by banking regulators prior to the Easter weekend.
In the closing of New Frontier Bank by the Colorado Division of Banking's State Bank Commissioner, the Federal Deposit Insurance Corporation (FDIC) was named receiver. The FDIC created a Deposit Insurance National Bank (DINB) to resolve and close the troubled bank. The FDIC contracted the Bank of the West, San Francisco, CA to provide temporary operational management of the Deposit Insurance National Bank of Greeley (DINB). The bank will stay open for about 30 days to give depositors time to open accounts at other institutions. During the 30-day period, all banking activities will continue normally, including direct deposit, writing checks, ATM and debit cards.
Under the FDI Act, the FDIC may create a DINB to ensure that depositors have continued access to their insured funds where no other bank has agreed to assume the insured deposits. Any depositors who have not transferred their funds to another bank before the end of the 30-day period will have a check mailed to them. Brokered deposits, CDs and IRAs are not a part of this transaction.
New Frontier had assets of $2 billion and deposits of $1.5 billion at the time of its closing. The cost to the FDIC's Deposit Insurance Fund will be about $670 million. New Frontier is the second bank to fail in Colorado in 2009. The first bank to close was the Colorado National Bank, Colorado Springs, CO on March 20.
Cape Fear Bank, Wilmington, NC was closed by the North Carolina Office of Commissioner of Banks. The FDIC was appointed receiver, and the First Federal Savings and Loan Association of Charleston, Charleston, SC agreed to acquire all of the failed bank's deposits.
Cape Fear Bank's eight offices reopened today as branches of First Federal. The failed bank had assets of $492 million and deposits of $403 million. First Federal will buy $468 million of those assets. The FDIC and First Federal entered into a loss-share transaction on $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 cost to FDIC's Deposit Insurance Fund will be $131 million. Cape Fear Bank is the first bank to fail in North Carolina in 16 years. The last bank to fail in the state was Crown National Bank in Charlotte on May 20, 1993.