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FDIC Closes Florida Bank

124th bank to fail in 2009

By Mark Huffman
ConsumerAffairs.com

November 21, 2009

FDIC said it entered into a purchase and assumption agreement with Central Bank, Stillwater, Minnesota, to assume all of the deposits of Commerce Bank of Southwest Florida. Commerce Bank had only one branch, which has become part of Central Bank.

As bank failures go, this was relatively small. As of August 28, 2009, Commerce Bank of Southwest Florida had total assets of $79.7 million and total deposits of approximately $76.7 million.

Central Bank did not pay a premium to assume all of the deposits of Commerce Bank of Southwest Florida. In addition to assuming all of the deposits of the failed bank, Central Bank agreed to purchase essentially all of the assets.

The FDIC and Central Bank entered into a loss-share transaction on approximately $61 million of Commerce Bank of Southwest Florida's assets. Central Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $23.6 million.

The collapse of the real estate market has been especially hard on Florida banks, since the state has seen real estate values plummet and foreclosures skyrocket. California and Georgia have also had a large number of bank failures this year, tied to bad real estate loans.

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