Asheville bank is third but won't be last to fail.

• Position: Western

When federal regulators closed Bank of Asheville in January and brokered its sale to Troy-based First Bancorp, 18 months had passed since North Carolina's last bank failure, It won't be that long, experts say, before another one bites the dust, though it probably won't be a heavyweight.

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The message from Bank of Asheville's failure is clear, says Tony Plath, associate professor of finance at UNC Charlotte: "We have a tale of two banking industries. The big banks, except for Bank of America, are doing well. But when you get to the regionals, the industry is distressed." Ray Grace, the state's deputy commissioner of banks, says 15 state-chartered banks are classified as troubled. "Three years ago, we had one." The main problems are the weakness of the commercial real-estate market and high unemployment. "Banks operate in the context of the economy they're in. When people don't make money, they don't spend and businesses--including banks--don't make money."

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He agrees that there is a divide between large and small banks, partly because the larger ones got more help from the federal government. But he also notes that the three North Carolina banks that have failed since the national financial crisis of 2008 have either been on the coast--Wilmington-based Cape Fear Bank and Wilmington-based Cooperative Bank--or in the mountains. Both are regions where real-estate values had appreciated rapidly during the housing boom, and both have been hurt by weakness in the second-home and resort markets. Bank of Asheville had other problems: Its former CEO, Buddy Greenwood, has been indicted on charges of bank fraud, stemming from a $500,000 loan he made, and money laundering.

Plath believes the problems are broader and expects more contraction of the 85 state-chartered banks this year--possibly three or four more closures. He expects...