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""Beach First National Bank"":http://www.beachfirst.com in Myrtle Beach, South Carolina, was shut down this weekend by the Office of the Comptroller of the Currency. It's the 42nd ""FDIC-insured institution to fail"":http://www.fdic.gov/bank/individual/failed/banklist.html this year, and the first in South Carolina since March 1999.
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The FDIC brokered a deal with ""Bank of North Carolina"":http://www.bankofnc.com out of Thomasville, North Carolina to take over Beach First's seven branches and its $516 million in deposits. Bank of North Carolina did not pay the FDIC a premium for the deposits.
The North Carolina bank also agreed to purchase all of Beach First's $585.1 million in loan assets. The FDIC and Bank of North Carolina entered into a ""loss-share transaction"":http://www.fdic.gov/bank/individual/failed/lossshare/index.html on $497.9 million of the acquired assets.
According to the consumer-focused Web site ""Mybanktracker.com"":http://www.mybanktracker.com/bank-news/2010/04/12/beach-first-national-bank-closes-bank-failures-for-2010-hit-42/, Beach First Bank enjoyed triple-digit profits at the height of the real estate surge by concentrating investments on condominiums and upscale properties along the coastline. That strategy, though, proved to be the bank's Achilles heel when the mortgage crisis set in and the price bubble burst.
The site noted that for the first nine months of 2009, Beach First Bank was in the red for $24 million, prompting regulators to put it under close scrutiny, and then this weekend, shutter the community-based institution after it was unable to boost capital reserves.
The FDIC expects Beach First's failure to cost its deposit insurance fund about $130.3 million, but said the transfer to Bank of North Carolina was the ""least costly"" resolution.
