FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

OMB APPROVAL OMB Number: 3235-0287 Expires: January 31, 2005 Estimated average burden hours per response... 0.5

(Print or Type Responses)

1. Name and Address of Reporting Person * Southerland Michelle L   2. Issuer Name and Ticker or Trading Symbol Cape Fear Bank CORP [CAPE] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) _____ Director _____ 10% Owner __X__ Officer (give title below) _____ Other (specify below) Corporate Secretary (Last) (First) (Middle) 1117 MILITARY CUTOFF ROAD 3. Date of Earliest Transaction (Month/Day/Year) 06/29/2007 (Street) WILMINGTON, NC 28405 4. If Amendment, Date Original Filed(Month/Day/Year) 6. Individual or Joint/Group Filing(Check Applicable Line) _X_ Form filed by One Reporting Person ___ Form filed by More than One Reporting Person (City) (State) (Zip) Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned

1.Title of Security (Instr. 3) 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common Stock               1,950 (3) D   Common Stock               2,301 (3) (4) I By 401 (k) Plan Common Stock               99 (3) I By Corey M. Southerland

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
	Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.		SEC 1474 (9-02)

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security (Instr. 3)

2. Conversion or Exercise Price of Derivative Security

3. Transaction Date (Month/Day/Year)

3A. Deemed Execution Date, if any (Month/Day/Year)

4. Transaction Code (Instr. 8)

5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5)

6. Date Exercisable and Expiration Date (Month/Day/Year)

7. Title and Amount of Underlying Securities (Instr. 3 and 4)

8. Price of Derivative Security (Instr. 5)

9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)

10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4)

11. Nature of Indirect Beneficial Ownership (Instr. 4)

Code

V

(A)

(D)

Date Exercisable

Expiration Date

Title

Amount or Number of Shares

Employee Grant June 17, 1999 (Right to Buy)

$ 6.68 (3)

(1)

06/17/2009

Common Stock

2,583

2,583 (3)

D

Employee Grant February 21, 2002 (Right to Buy)

$ 3.78 (3)

02/21/2003

02/21/2012

Common Stock

689

689 (3)

D

Employee Grant July 22, 2005 (Right to Buy)

$ 9.76 (3)

(2)

07/22/2015

Common Stock

2,412

2,412 (3)

D

Reporting Owners

Reporting Owner Name / Address	Relationships
	Director	10% Owner	Officer	Other
Southerland Michelle L 1117 MILITARY CUTOFF ROAD WILMINGTON, NC 28405			Corporate Secretary

Signatures

Michelle L. Southerland, By: William R. Lathan, Jr., Attorney-in-Fact		07/31/2007
**Signature of Reporting Person		Date

Explanation of Responses:

*	If the form is filed by more than one reporting person, see Instruction 4(b)(v).
**	Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1)	This option vests in five equal annual installments beginning June 17, 2000.
(2)	This option vests in three equal annual installments beginning July 22, 2006.
(3)	As adjusted to reflect the effect of two 5% stock dividends which became effective June 30, 2006 and June 29, 2007. As a result of the stock dividends, the reporting person received an aggregate of 180 and 8 additional shares which are included in the common stock shares reported as held directly and indirectly, respectively. At the same time, and in accordance with antidilution provisions of the Issuer's stock option plans, the reporting person's stock options became exercisable for 797 additional shares, and the exercise prices were similarly adjusted.
(4)	The number of shares is based on the reporting person's 401 (k) plan statment as of June 30, 2007, and includes shares acquired under the plan between December 31, 2005, and June 30, 2007, as well as additonal shares credited to the plan account as a result of the two 5% stock dividends which became effective on June 30, 2006 and June 29, 2007.
Remarks: This report is furnished solely to show the effect of the stock dividends and does not represent a transaction by the reporting person.

Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.

Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB number.