A Myrtle Beach lender has become the first South Carolina-based bank to fail in more than a decade.
Regulators shut down Beach First National Bank after the close of business Friday, marking the nation's 42nd bank failure this year amid mounting loan defaults, especially in commercial real estate.
The Federal Deposit Insurance Corp. took over the seven-branch Beach First, which had $585.1 million in assets and $516 million in deposits. Regulators found that the bank had significant decreases of assets and earnings due to unsafe and unsound practices.
Bank of North Carolina, based in Thomasville, N.C., agreed to assume the assets and deposits of the failed bank. In addition, the FDIC and Bank of North Carolina agreed to share losses on $497.9 million of Beach First's loans and other assets.
Since Nov. 4 , Beach First had been operating under a "consent order" with the Office of the Comptroller of the Currency, which is viewed as one of the most serious forms of regulatory oversight.
Earlier this month, the troubled lender said in a filing with the Securities and Exchange Commission that it would file its 2009 annual report late and take a $14 million loss. The projected deficit stemmed from problems in the commercial loan portfolio, which has been slammed by the Grand Strand's real estate troubles.
The OCC recently audited the company's books, according to an April 1 filing.
Under a new interim chief executive officer, Beach First took the drastic measure a few weeks ago of shutting down its mortgage lending division.
Also, the bank had been under pressure to raise significant capital. It also was in talks with potential investors and other banks about a possible merger.
John Poelker, who until Friday held the title of interim CEO of Beach First, acknowledged the seriousness of the bank's financial problems last week but still held out hope that the business would survive. "There's nothing going on right now that sort of suggests this is the final nail in the coffin," Poelker told the Sun News.
The FDIC typically seizes banks after the close of business each Friday and reopens them the following business day under new ownership.
First Federal of Charleston worked with the agency last year to acquire the assets of a failed lender in Wilmington, N.C. The local bank had been invited to review Beach First's books and submit a bid, but it declined, said Dee Bee Wright, vice president for investor relations.
The last FDIC-insured institution that closed in the state was Victory State Bank in Columbia, which was shuttered on March 26, 1999.
The Sun News and The Associated Press contributed to this report.