Florida is home to nation's 100th bank failure as heavy closings prompt reassurance from FDIC

Wake up and good morning. The nation's symbolic 100th bank failure of the year -- tiny Partners Bank in Florida (of course!) -- blazed by Friday as the Federal Deposit Insurance Corp. dealt with a whopping seven failures across the country on that one day -- raising the country's total in '09 top 106.

Three of those failures, including Partners, took place in Florida. Read more here about the Florida failures. We'll say a bit more about the three Florida failures, which bumped the number of Florida bank closings this year from six to nine, in a moment.

 What the 100th failure did inspire was a new video by FDIC Chairman Sheila C. Bair (in photo, by AP), which was the deposit insurance chief's attempt to offer reassurance to depositors that (despite the FDIC insurance fund being already in the red from covering all those bank failures) that federally-insured bank deposits are as safe as ever. Watch the video here at the FDIC Web site or here on YouTube.

The point is we have not faced 100-plus bank failures in one year in quite awhile (since 1992) and expectations are we will see a bunch more before things calm down again. Hence the Bair reassurance speech.

Why do we care? Because it is crucial that all depositors at FDIC-insured banks pay attention to how much money they have in one bank and whether their accounts are properly structured to make sure those deposits are fully insured.

Depositors at Partners Bank and Hillcrest Bank Florida, both of Naples, and Flagship National Bank of Bradenton -- the three Florida banks to fail and be put in the hands of other banks over the weekend -- would be very glad to day if they paid attention to deposit insurance. Lucky for them, the acquiring banks of the failed Florida banks, agreed to take over all the deposits.

But the FDIC very easily could have enforced the limits it places on deposit insurance and some depositors could have found themselves on the losing end with unprotected deposits. Find out how deposit insurance works here. For more insight into the two bank failures in Naples,here's the local story at NaplesNews.com.

And here's the Bradenton Herald's take on the closing of the local Flagship bank. The bulk of the nine Florida bank failures so far this year are concentrated in a strip from Bradenton south to Naples. which also happens to be the part of coastal Florida that's suffered the greatest backlash to runaway housing prices.

For the record, here are all nine bank failures so far this year in the state:

1. Ocala National Bank, Ocala

2. Riverside Bank of the Gulf Coast, Cape Coral

3. BankUnited, Coral Gables

4. Integrity Bank, Jupiter

5. First State Bank, Sarasota

6. Community National Bank of Sarasota County, Venice

7. Partners Bank, Naples

8. Hillcrest Bank Florida, Naples

9. Flagship National Bank, Bradenton

--Robert Trigaux, Times Business Columnist

 

Comments

[Rob]

The 106 bank failures for 2009 are the most failures since 1992. Banks are failing fastest in those states with highest unemployment.

This website has graphs showing the bank failures by state and bank failures by month.
http://robvstate.com/2009/10/25/bank-failures-102009/

[notsosmart]

Can someone tell me when a bank "supposedly fails" do the shareholders of the bank at the time of the "supposed failure" lose out? In other words, at the time it is declared the bank failed, are the banks stock declared worthless?

[notsosmart]

"But the FDIC very easily could have enforced the limits it places on deposit insurance and some depositors could have found themselves on the losing end with unprotected deposits".
Now as a regular citizen/taxpayer I have to ask this question, "Has the FDIC overstepped its' bounds by insuring deposits over the limits"?
I ask this because this appears to be precedence setting and the act can easily be a problem if it chooses not do the same thing at a different bank regardless of the circumstances in the future (if it not has done so already)! I think this is a lawsuit waiting to happen.