First Federal takes over failed N.C. bank

First Federal takes over failed N.C bank Charleston-based First Federal Savings and Loan has taken over eight branches of the former Cape Fear Bank of Wilmington, N.C., which failed Friday. The bank is the 22nd in the nation to fail this year. The takeover gives First Federal access to an area in coastal North Carolina where it had hoped to grow.

By Ashley Fletcher Frampton
aframpton@scbiznews.com
Published April 13, 2009

Charleston-based First Federal Savings and Loan has taken over eight branches of the former Cape Fear Bank of Wilmington, N.C., which failed on Friday.

Branches of the bank, the 22nd in the nation to fail this year, reopened today as First Federal branches.

Through strategic planning, First Federal had targeted Wilmington, N.C., as an area into which it wanted to grow, said Dee Bee Wright, First Federal’s vice president for investor relations and corporate secretary. First Federal bid for the takeover and received approval from the Federal Deposit Insurance Corp.

First Federal previously had one branch in coastal North Carolina. With the eight new North Carolina branches, First Federal has 66 branches total. Outside the Charleston area, the bank’s S.C. branches are in Horry, Georgetown, Florence and Beaufort counties.

First Federal will acquire the deposits of Cape Fear Bank for a premium of 1%. The FDIC will pay First Federal for assuming its loans, Wright said, but the figures are not yet final.

The FDIC said Cape Fear Bank had assets totaling $492 million and deposits totaling $403 million as of March 31. The FDIC said First Federal would assume all deposits and would purchase about $468 million in assets.

Separately, First Federal officials said they expect to net about $300 million in deposits, $380 million in loans and $4 million of other real estate owned through the transaction.

Wright said First Federal’s figures, which are different from the FDIC’s, are estimates based on financial information available to First Federal from the failed bank. The FDIC has more recent data, and the two parties will be working to reconcile final figures, she said.

The FDIC said it will share with First Federal in losses on about $395 million in assets. The FDIC will cover 80% of the losses on loans and real estate up to $110 million and 95% of losses exceeding that amount, according to First Federal.

The FDIC estimates that the cost to its fund will be $131 million. The arrangement should maximize returns on the assets by keeping them in the private sector and minimize disruptions for loan customers, the FDIC said in a statement.