By Staff
From staff and wire reports
Cooperative Bank of Wilmington, including the company’s branch in Washington, was shut down by regulators Friday.
Cooperative Bank was one of three small banks closed, pushing this year’s tally of failed banks to 40. The wave of bank failures is expected to continue throughout the year as the weak housing market and rising unemployment rate cause more borrowers to default on their loans.
Cooperative Bank was closed by the North Carolina Commissioner of Banks on Friday, according to Cooperative Bank’s Web site. The Federal Deposit Insurance Corporation later was named receiver.
Brad Davis, Cooperative Bank’s area manager for Washington, declined comment Friday night. He referred requests for comment to the FDIC.
The bank’s Washington branch was one of 24 the company operated. All were closed.
As is federal policy, no advance notice of the move was given to the public.
The FDIC agreed to have First Bank of Troy take over Cooperative Bank’s branches and nearly all of its assets. Cooperative Bank had total assets of $970 million and total deposits of $774 million.
The FDIC will retain the remaining unacquired assets to sell later and has entered into a loss-sharing agreement to maximize returns on the assets and minimize disruptions for loan customers.
The FDIC said it estimates that Cooperative Bank’s failure will cost the deposit insurance fund $217 million.
One of the other banks was Southern Community Bank of Fayetteville, Ga., and the third bank closed Friday was the First National Bank of Anthony in Anthony, Kan. The FDIC was appointed receiver of both of those banks, as well.
The number of banks on the FDIC’s list of “problem” institutions leaped to 305 in the first quarter — the highest number since 1994, during the savings and loan crisis — from 252 in the fourth quarter.
To be sure, most “problem” institutions don’t fail, but the pace of failures has been much higher this year than in past years. The 40 institutions that have closed this year compare with 25 in all of 2008 and just three in 2007.
One silver lining is that while more banks are being shuttered this year than last, the size of the banks has tended to be smaller.