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 (NYSE:STINews) 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 (Other OTC:IDMC.PKNews), 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)
Friday August 1, 9:51 pm ET

Source: Reuters

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