A struggling Connecticut bank is facing the possibility of closure by regulators for the third time in as many years - and observers think it might be the last.

According to sources familiar with the situation, the Federal Deposit Insurance Corp. has distributed information about Fairfield First Bank and Trust Co. to several potential acquirers in which it said the bank's tangible capital had dropped below zero.

Under the Federal Deposit Insurance Corp. Improvement Act of 1991, regulators can take over or force the sale of an institution when the ratio falls below 2%. An institution has 90 days to bring its capital level up before the regulators must act.

That gives Fairfield First officials until the end of July to raise between $6 million and $10 million in fresh cash. The $57 million-asset institution slipped below the minimum mark in mid-April, sources say.

New management, installed just two months ago, has told local papers that Fairfield is trying yet again to raise capital to stave off seizure by regulators, and is even working with investment banker Keefe, Bruyette & Woods. Bank officials could not be reached for comment.

But the FDIC apparently doesn't think Fairfield's latest search for capital is likely to work this time. Sources confirm that the agency has been shopping the bank around with potential buyers and even conducted a bid meeting, in May.

"It's awfully difficult to raise capital when the FDIC has a gun to your head," said John Carusone, president of Hartford-based Bank Analysis Center. "It's not impossible. They've done it twice before. But you can be lucky just so many times. Cats have nine lives, not banks."

FDIC officials would not confirm that the agency is contacting buyers, but another investment banker said the agency "probably would have rounded up the usual list of suspects in the bidding process."

Such a list could include not only community banks in the Fairfield County area, but also regionals Fleet Financial Group and First Union Corp. as well as several superregionals and money-centers with operations in southwestern Connecticut.

Fairfield First has been grappling unsuccessfully for several years with high nonperforming assets and costly losses. The two-branch bank has sought capital twice in the past two years, raising $8 million in all.

However, the bank continued to lose money, failing to stem the bleeding from its bad assets and allowing capital to dwindle back down to near zero. Fairfield First lost more than $5 million in 1995.

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