First Federal of Charleston has had its eye on Wilmington
for a while.

“Wilmington has always been a top market,” for the bank’s expansion strategy, said First Federal CEO Tom Hood.

“It’s a similar market to Charles­ton,” he said. “It is a natural progression of our coastal marketplace.”

The bank had 58 branches from Hilton Head Island, S.C., all the way up to Sunset Beach. The eight branches of the former Cape Fear Bank that First Federal took over on April 10 give the bank a toehold into the North Carolina market.

After the North Carolina Commis­sioner of Banks shut
down Cape Fear Bank, the Federal Deposit Insurance Corp. was appointed receiver.

The FDIC had previously arranged for First Federal Savings and Loan Association of Charleston (held by First Financial Holdings) to acquire all the deposits of the failed institution and the majority of its assets.

First Federal won an FDIC-run auction for the remains of Cape Fear Bank a few days before the takeover.

During a Saturday afternoon interview in an emptied-out corner office of the former Cape Fear Bank headquarters building on Military Cutoff Road, Hood was careful to explain that he wants to reassure the employees of the former Cape Fear Bank.

Hood said he expects to keep most of the eight former Cape Fear Bank branches running for the time being. First Federal and Cape Fear Bank had some overlap in service in Sunset Beach where the two banks had branches within a few blocks of one another.

Hood said Saturday a decision had not yet been made about what to do with those two branches.

“We have a branch in Sunset Beach that is about a quarter mile from a large new branch that Cape Fear was building,” he said.

“We’re going to make some decision about which of those offices we are going to continue to operate.”

The former Cape Fear Bank branch in Sunset Beach was completed last year, but had not yet been occupied. The branch there had been running from a temporary office.

 “These folks have been under a lot of stress for a long period of time and there has been uncertainty. The first part that we play in this is to give them some comfort in what’s happening,” Hood said.

“We know that there are going to be operations here that are similar to the operations we have at our headquarters.

“So there will be some changes over time. But we have consolidated some operations in the past in our own footprint, and I think we approach that in a way that we are really focused on the employee and what happens to the employee.”

He also said that, as a publicly traded company, the bank’s board will be heavily involved in the transition.

“Obviously we are a public company and we have a board of directors and they’ll be involved in decisions about allocation of resources and lending activities,” he said.

Expansion plans

Hood said First Federal is committed to giving its customers as many seven-day-a-week-banking options as possible. The bank has more than a dozen branches in its market area inside Wal-Mart Superstores that operate seven days a week and at non-traditional banking hours.

Wilmington is “a very exciting marketplace,” Hood said.

“In virtually all of our markets, we have seven-day-a-week banking. We try to get a number of locations that support that. We are very familiar with the Lowe’s Foods stores. We’ve had lots of conversations with them and we have partnered with them” in the past. “We have 14 or 15 of the Wal-Mart Superstores [where] we provide seven day a week banking.”

Hood said First Federal has appointments set up this week with Lowe’s Foods to discuss the possibility of opening some branches in supermarkets in southeastern North Carolina.

Loans from Cape Fear

Hood’s advice to those with construction loans or mortgages through the former Cape Fear Bank is to come in and have a conversation with the loan officers.

He said First Federal’s philosophy is to keep as many as possible of the relationships with the customers it inherited.

“It pays to keep these relationships,” Hood said. The current
economic conditions are “going to end at some point in time. We hope sooner rather than later. And we will be building homes once again. And they’ll need solid finance to do that.”

“We take a long view of the market,” he said.

To the customers from Cape Fear whose loans were in trouble, Hood said “what we want to do is work constructively with them.”

First Federal has been running a “foreclosure clinic” in its markets and he has seen a great return on the investment. He said as many as 60 percent of the hundreds of customers who participate in the clinics have been able to negotiate with the bank.

“There are going to be some circumstances where foreclosure is an option, where short sale is an option, where helping with some finance of their project can be an option, but we’re going to look at all of these things and try to find a solution.”

Cooperative option

Hood said First Federal has been monitoring Wilmington’s banks to evaluate the bank’s expansion opportunities here.

“Cooperative was a bank that we also monitored.”

But, he said, “Cape Fear got to this point that the FDIC wanted to go ahead and find a solution.”

Hood said First Federal is known as a good corporate citizen in its markets. “We support local theatres, theatre groups and support lots of local arts organizations. We expect to be very, very active in this marketplace.”

Background check

First Federal is headquartered in Charleston, S.C. The bank was started in 1934. The bank has branches in seven counties across South Carolina, but most are along the coast with several more in Florence, S.C. First Federal now has branches in Brunswick and New Hanover counties in North Carolina.

Before the transaction, First Federal had about 1,000 employees. The bank now has almost 100 more former Cape Fear Bank employees.

First Federal (FFCH) shares trade on the NASDAQ.

First Federal’s parent company is First Financial Holdings Inc.