A long-running battle for control of Cape Fear Bank Corp. in Wilmington, N.C., should be settled this week when investors will decide whether to retain directors up for re-election or replace them with a dissident slate supported by one of the company's largest shareholders.

The two sides have been sparring for nearly a year in letters, news releases, and Securities and Exchange Commission filings, and their war of words escalated last week when both sides claimed support for their slates from independent proxy advisory firms.

The results could be announced as early as Tuesday, when the $496 million-asset company will hold its annual meeting.

An analyst who follows Cape Fear gives the dissident group a legitimate chance of winning, an outcome that he said could have repercussions for other community banks in the Southeast.

The dissident group is led by Maurice Koury, who owns 8.82% of Cape Fear's shares. He has fielded a full slate of candidates to replace the current six-member board, though he is not one of the candidates. Last year Mr. Koury urged the company to sell itself, and in January of this year he made an offer himself: $45.2 million in cash, or $12 a share. Mr. Koury has cooled on the idea now that Cape Fear's shares are trading at around $6, though he maintains that bringing in new blood would "maximize shareholder value."

On Tuesday, Mr. Koury's group issued a news release asserting that the proxy advisory firms RiskMetrics Group and Glass Lewis & Co. supported its candidates. Both firms recommended James S. Mahan, with RiskMetrics also supporting Mort Neblett, and Glass Lewis supporting David Lucht.

On Wednesday, Cape Fear put out its own release, calling the dissident's release misleading. Though both proxy advisory firms recommended that shareholders vote for two members of the dissident group, they do not endorse the other four. In the release Cameron Coburn, Cape Fear's chairman and chief executive officer, said, "It is clear that Mr. Koury and his group failed to convince" RiskMetrics "that they should be allowed to take control of the … board."

That may be true, but the RiskMetrics report also advised shareholders not vote for any of the current Cape Fear directors that management supports. The Glass Lewis report has "do not vote" recommendations for all of the management team's board members.

Cape Fear said it lost $599,000 in the second quarter. Its $375,000 loss provision brought its provision for the year to $1.2 million, 1,457% more than its provision for the first six months of 2007.

Christopher W. Marinac, an analyst with FIG Partners LLC, said he was surprised by Cape Fear's assertion that the advisory firms did not support the dissident group, given that both reports voiced clear opposition to the current board's entire slate.

Cape Fear did not return calls.

Mr. Marinac said the dissident group has a shot of winning because Cape Fear has had weak results and has failed to build a strong core deposit base. It has just under $400 million of deposits, but 73% of that is in certificates of deposit. He said the dissident group has some good alternatives for the board, including Mr. Mahan, who founded the banking technology provider S1 Corp. and was its chairman and CEO.

If the dissidents do win, Mr. Marinac said, it would be "a wake-up call for every community bank in North Carolina and the Southeast." It would show that "shareholders are paying attention to who's creating value. And I think that value creation stems back to deposits."

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