Fla. Bank Shuttered; SunTrust to Take Over Branches
Saturday, August 2, 2008
First Priority Bank of Bradenton was closed by Florida state regulators yesterday, the eighth bank to collapse this year as lenders grapple with failed loans and writedowns stemming from a slump in home prices.
First Priority, with $259 million in assets, was turned over to the Federal Deposit Insurance Corp., the agency said in a statement. The bank's deposits were sold to SunTrust Banks, and six First Priority branches will open Monday as SunTrust offices, the FDIC said.
The pace of closings is accelerating. Banks and securities firms have reported more than $480 billion in writedowns and credit losses since 2007, when three banks were shuttered.
Regulators in July closed IndyMac Bancorp, a California-based mortgage lender with $32 billion in assets, the third-largest bank seizure in U.S. history.
"The only thing sure other than death and taxes is that deposit insurance premiums will be going up as more banks fail," said Gerard Cassidy, an analyst with RBC Capital Markets in Portland, Maine. He expects 300 U.S. banks to fail in the next several years, mainly because of mounting losses from real estate-related loans.
SunTrust will buy about $227 million in deposits for no premium, while acquiring about $42 million in assets, the FDIC said. The transactions will cost the U.S. deposit insurance fund an estimated $72 million, the FDIC said.
The FDIC insures deposits of up to $100,000 per depositor per bank, and up to $250,000 for some retirement accounts at 8,494 institutions with $13.4 trillion in assets.
Lenders on the FDIC's "problem list" climbed to 90 in the first quarter from 76 in the fourth quarter of 2007, the agency said in May. FDIC Chairman Sheila C. Bair said 13 percent of listed banks may fail, while the remainder are nursed back to health or are sold off to healthier lenders.
Bair and Comptroller of the Currency John C. Dugan said on July 28 they expected more lenders to fail this year as the pace of shutdowns returns to more normal levels.
The FDIC has closed 35 banks since October 2000. The government shut 12 banks in 2002, the highest in the period, while 2005 and 2006 had no closures.
First Priority is the first Florida bank to fail since Guaranty National Bank in Tallahassee in March 2004, the FDIC said. Bank regulators last week closed First National Bank of Nevada and California-based First Heritage Bank.