July 30, 2010 – Coastal Community Bank, Panama City Beach, Florida, was closed today by the Florida Office of Financial Regulation. Coastal Bank, the third oldest bank in Florida, was originally started as the Apalachicola State Bank in 1906. In 2002, Apalachicola State Bank was acquired by Coastal Community Bank, a newly chartered bank. At the time of closing, Coastal Bank had 10 offices in Florida and one in Mobile, Alabama.
Coastal Community Bank was issued a prompt corrective action on June 24, 2010 in which the FDIC described Coastal as being “significantly undercapitalized“. Coastal Community, a $373 million asset institution, had a troubled asset ratio of 401 compared to a national average of 15. The vast majority of the failed banks this year had troubled asset ratios of 100% or greater. Very few banks are able to recapitalize or recover once the level of loan defaults brings the troubled asset ratio over 100%. Unable to raise additional capital, regulators had no choice but to close Coastal Community Bank.
The FDIC, acting as receiver, entered into a purchase agreement with Centennial Bank, Conway, Arkansas, to acquire failed Coastal Bank. Centennial will assume all deposits and essentially all of the assets of failed Coastal Bank. Besides acquiring Coastal Bank, Centennial also acquired Bayside Savings Bank of Port Saint Joe, Florida, which was also closed by regulators today.
All branches of both Coastal Community and Bayside Savings Bank will reopen as branches of Centennial Bank with no interruption of service to depositors. All depositors of Coastal Bank and Bayside Bank will automatically become customers of Centennial Bank.
Coastal Bank had total assets of $372.9 million and total deposits of $363.2 million. Centennial Bank did not pay a premium to the FDIC on the purchase of the failed bank assets.
The FDIC and Centennial Bank entered into a loss-share transaction on $302.8 million of Coastal Bank’s assets, which limits potential losses to Centennial Bank. According to the FDIC, the loss-share transaction maximizes returns by keeping assets in the private sector and minimizes disruption to loan customers.
Coastal Community Bank becomes the nation’s 106th banking failure and the 20th in Florida. Almost 20% of all banking failures for 2010 have occurred in Florida, which now leads the nation in the number of bank failures. Georgia, with 11 banking failures, comes in second.
The failure of Coastal Community will cost the FDIC Deposit Insurance Fund an estimated $94.5 million.