Florida bank fails

August 1, 2008 4:23:50 PM PDT
The Federal Deposit Insurance Corp. said Friday it has taken control of the First Priority Bank of Bradenton, Fla., and that SunTrust Banks Inc. will assume the bank's deposits. First Priority is the eighth U.S. bank to fail this year in the aftermath of the mortgage crisis, and the first Florida bank failure since March 2004. Andrew Gray, spokesman for the FDIC, said the bank had "significant loan losses" in the Florida commercial real estate market that eroded its capital.

Last month, California mortgage lender IndyMac Bancorp Inc.

became the largest regulated thrift to fail in U.S. history.

IndyMac's holding company filed for Chapter 7 bankruptcy protection on Thursday.

On Friday, the Florida Office of Financial Regulation closed First Priority of Bradenton, the FDIC said. The FDIC was then named receiver of the bank, and entered into an agreement with Atlanta-based SunTrust Bank to assume its insured deposits.

The six branches of First Priority Bank will reopen on Monday as SunTrust branches.

"It will be a pretty seamless transition for the depositors," Gray said.

Announcements of bank failures tend to be made after the close of business on a Friday, so the banks can reopen under new ownership the following Monday morning. A week ago, the 28 branches of the 1st National Bank of Nevada and First Heritage Bank N.A. - owned by Scottsdale, Ariz.-based First National Bank Holding Co. - were closed by the FDIC, with the assets ought by Mutual of Omaha Bank.

SunTrust Banks was the 13th largest bank by assets as of March 31, with nearly $179 billion in assets, according to American Banker. In addition to assuming the failed bank's insured deposits, it will buy about $42 million of First Priority's assets. LNV Corp.

of Plano, Texas, has agreed to buy another $14 million of the failed bank's assets. The FDIC will keep the remaining assets for later disposition, it said.

As of June 30, First Priority had total assets of $259 million and total deposits of $227 million - $13 million of which were uninsured deposits, the FDIC said. It estimated that those deposits were held in about 840 accounts that potentially exceeded the FDIC's $100,000 per depositor insurance limit.

For those account holders, the FDIC recommends calling it toll free at 1-800-837-0215 to set up an appointment to discuss their deposits. The FDIC said it will pay depositers with amounts exceeding the limit 50 percent of their uninsured balance.

(Copyright 2008 by The Associated Press. All Rights Reserved.) AP-NY-08-01-08 1902EDT