Banking regulators on Friday said they closed Beach First National Bank (BFNB), making it the 42nd U.S. bank to fail in 2010 and the first in South Carolina.
Beach First was closed by the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp. or FDIC was named as Receiver on Friday.
The FDIC said that Myrtle Beach, South Carolina-based Beach First's seven branches will be acquired by Bank of North Carolina, a wholly-owned subsidiary of BNC Bancorp (BNCN). The seven branches will reopen on Monday as branches of Bank of North Carolina and its depositors will automatically become depositors of that bank.
Further, the FDIC said depositors in the failed bank can continue to access their money over the weekend by writing checks, or using automated-teller machines or debit cards, and that loan customers should continue making payments as usual.
As of December 31, 2009, Beach First National had about $585.1 million in total assets and $516.0 million in total deposits. Bank of North Carolina did not pay the FDIC a premium for the deposits of Beach First National Bank. In addition to assuming all of the deposits of the failed bank, Bank of North Carolina agreed to purchase essentially all of the assets, the FDIC noted.
As part of the sale, the FDIC and Bank of North Carolina entered into a loss-share transaction on $497.9 million of Beach First National Bank's assets. Bank of North Carolina will share in the losses on the asset pools covered under the loss-share agreement. The FDIC estimates that the latest bank failure to cost its Deposit Insurance Fund $130.3 million.
In late February, the FDIC said that the troubles still facing the banking market led it to place a total of 702 institutions on it's "Problem list" at the end of December 2009, up from 552 at the end of September. That brought the total number of failures for the year to 140, the most annually since 1992.
The failures placed an increased strain on the FDIC's finances, with its Deposit Insurance Fund running in the red by $12.7 billion by the end of the year. However, since much of the fund's losses stem from assets being set aside to cover anticipated bank failures, the FDIC can run at a negative fund balance for some time.
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