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Banks Fail in Colorado, North Carolina

Stocks in this article: CAPE FFCH

Updated from 10:21 a.m. EDT

Regulators shut down two banks Friday, bringing the total number of bank and thrift failures during 2009 to 23. For the third time in less than a month, the FDIC apparently was unable to find a buyer for one of the failed institutions.

The Colorado State Bank Commissioner shut down New Frontier Bank of Greeley, Colo. and named the FDIC receiver. The FDIC created the Deposit Insurance National Bank of Greeley, which was to operate for about 30 days and allow New Frontier's retail savings and checking depositors to move their insured balances to other institutions. The rest of New Frontier's deposits were to be returned directly to depositors or, in some cases, to brokers.

Meanwhile, The North Carolina Commissioner of Banks shut down Cape Fear Bank of Wilmington, N.C. and appointed the Federal Deposit Insurance Corp. receiver. The FDIC then arranged for First Federal Savings and Loan Association of Charleston (held by First Financial Holdings (FFCH)) to acquire all the deposits of the failed institution and most of its assets. Cape Fear Bank's holding company was Cape Fear Bank Corp. (CAPE).

New Frontier Bank

New Frontier Bank had total assets of $2.0 billion and total deposits of roughly $1.5 billion. The FDIC apparently didn't find another institution willing to acquire New Frontier's deposits. Instead, it created a Deposit Insurance Bank to allow savings and checking depositors to move their insured funds to other institutions over the next 30 days. Deposit Insurance National Bank of Greeley will be administered by Bank of the West of San Francisco, and checks written against New Frontier accounts will continue to be paid until the Deposit Insurance Bank closes. Deposits transferred to the Deposit Insurance Bank totaled about $150 million. The remaining CD and IRA deposits will be returned by check directly to the depositors, or, for brokered CDs, to the brokers.

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