A North Carolina bank that had belonged to the long-troubled Capitol Bancorp was closed by state regulators on Friday.
The North Carolina Office of the Commissioner of Banks closed the $22 million-asset Pisgah Community Bank in Asheville. The Federal Deposit Insurance Corp. entered into an agreement with Capital Bank in Rockville, Md., to transfer $19.8 million of the bank's assets and assume all of its $21.2 million in deposits. The FDIC said in a press release it would retain the remaining assets for later disposition.
The FDIC expects the failure to cost the Deposit Insurance Fund $8.9 million. The FDIC has the authority to hold Capitol Bancorp's other banks responsible for the hit to the fund under the cross-guarantee liability. Capitol, which is based in Lansing, Mich., declined to comment.
The $1.6 billion-asset Capitol has been on the hunt for capital since it hired Keefe, Bruyette & Woods in April 2009 to help it find capital. Last year, Capitol filed for bankruptcy with the hopes of restructuring all of its stakeholders into a 53% equity stake in the company. It was expected to be paired with a new investor who would invest $70 million to $115 million in exchange for a 47% stake. One investor emerged, but later backed out. Capitol has pushed back the confirmation of its bankruptcy plan several times.
Several of its bank units are significantly undercapitalized.