Chipola Community Bank, FL, Closed By Regulators

Danger-Collapsing-BankAfter going without a banking failure since November 2012, regulators closed two Florida banks on Friday.  Shortly after closing the Heritage Bank of North Florida, regulators closed Chipola Community Bank of Marianna, Florida.  During 2012 a total of eight banks failed in Florida, accounting for 16% of the 51 bank failures nationwide.

Chipola Community Bank had been under the scrutiny of regulators since the Bank signed a Consent Order with the FDIC in November 2010 for engaging in unsafe and unsound banking practices.  The amount of defaulted loans had been increasing at an alarming rate since early 2009.  Faced with mounting losses and the inability to raise additional capital, regulators had no choice but to close insolvent Chipola Community Bank.

Appointed as receiver, the FDIC sold Chipola Community Bank to First Federal Bank of Florida, Lake City, Florida, which agreed to assume all deposits of the failed bank.  Chipola had only one branch which will reopen on Monday as a branch of First Federal.  All deposits will continue to be covered by FDIC deposit insurance up to the applicable limits.  All depositors of Chipola Community will have access to their money over the weekend through the use of checking accounts, ATMs and debit cards.

Chipola Community Bank was established on October 31, 2005, a time that coincided closely with the peaking of real estate values in Florida.  Unless the Bank’s lending committee had been unusually conservative in their lending practices, it would have been difficult to approve a loan on which the underlying collateral was not impaired as real estate values crashed after 2005.

At the end of December 31, 2012, Chipola had total assets of only $39.2 million and total deposits of $37.6 million.  Chipola Community Bank is the smallest banking failure of the year, ranking after 1st Regents Bank, MN, which failed in January with total assets of $50.2 million.

In addition to assuming all deposits, First Federal Bank of Florida agreed to purchase all of the assets of failed Chipola.

The cost to the FDIC Deposit Insurance Fund (DIF) for the failure of Chipola Community is $10.3 million.  Chipola Community Bank becomes the eight banking failure of the year and the second in Florida.

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