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Small Florida bank is 8th U.S. failure this year



2008-08-01 20:51:55

Small Florida bank is 8th U.S. failure this year

WASHINGTON (Reuters) –

Bank regulators closed a small

Florida-based bank on Friday, the eighth U.S. bank to fail this

year under pressure from a weak economy and a credit crisis

precipitated by falling home prices.

The Federal Deposit Insurance Corp said First Priority Bank

had $259 million in assets and $227 million in deposits and its

failure will cost the federal fund that insures deposits an

estimated $72 million.

SunTrust Banks Inc (STI.N) has agreed to assume the insured

deposits of First Priority, whose six branches will reopen

Monday as branches of SunTrust Bank.

Customers can access their money over the weekend by check,

teller machine or debit card, the FDIC said.

It is the first bank to fail in Florida since Guaranty

National Bank of Tallahassee failed in March 2004, according to

the FDIC, which blamed the failure on exposure to the real

estate market, predominantly in the construction lending area.

Florida is among several states whose housing markets have

seen the sharpest declines.

The biggest bank failure by far this year is IndyMac

(IDMC.PK), seized on July 11 with $32 billion in assets and $19

billion in deposits as of March, and the third-largest bank

insolvency in U.S. history.

The FDIC oversees an industry-funded reserve used to insure

up to $100,000 per account and $250,000 per individual

retirement account at insured banks.

The agency also has running tally of problem banks that its

examiners closely monitor. At the end of first quarter, 90

institutions were on that list.

The FDIC does not name the institutions on the list, which

is expected to be updated this month for the second quarter.

(Reporting by John Poirier; Editing by Tim Dobbyn)

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Blake Masterson

Freelance Writer, Journalist and Father of 5

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