By Karey Wutkowski

The Federal Deposit Insurance Corp said it immediately transferred New Frontier's insured deposits to the Deposit Insurance National Bank of Greeley (DINB), except for brokered deposits, certificates of deposit and individual retirement accounts.

The Deposit Insurance National Bank will remain open for about 30 days so customers can move their funds to other banks.

New Frontier had total assets of $2 billion and total deposits of about $1.5 billion as of March 24.

It is the 23rd U.S. bank to fail this year, and its resolution is expected to cost the deposit insurance fund about $670 million.

The number of bank failures has increased dramatically as the struggling economy and falling home prices take their toll on financial institutions. The failures have been draining the FDIC's deposit insurance fund, and the agency has taken steps recently -- including an emergency assessment on banks -- to replenish the fund.

The FDIC said it is allowed to create a deposit insurance national bank after it has seized an institution when no other bank has agreed to assume the insured deposits.

The agency has not created this type of temporary bank to resolve a failed institution since 1982, an FDIC spokesman said, adding that the process is more convenient for depositors, who do not have to wait for checks to be mailed to them.

Earlier on Friday, the FDIC announced that First Federal Savings and Loan Association of Charleston had agreed to acquire the deposits of failed Cape Fear Bank of Wilmington, North Carolina.

The FDIC said all of New Frontier's insured depositors are encouraged to transfer their insured funds to other banks.

Bank of the West, of San Francisco, was contracted by the FDIC to operate the Deposit Insurance National Bank. The main office and two branches of New Frontier will open on Monday, April 13, and former customers will have access to banking activities, such as direct deposit and writing checks, ATM and debit cards, during the 30-day transition period.

Brokered deposits, CDs and IRAs are not a part of the transaction, the FDIC said. The agency will mail checks to non-brokered deposit customers, and will pay the brokered deposits directly to the brokers for the amount of their insured funds.

(Reporting by Karey Wutkowski; Editing by Jan Paschal)