Coastal Bank of Cocoa Beach, Florida, was closed today by the Office of Thrift Supervision. The FDIC, acting as receiver, sold the failed bank to Premier American Bank, N.A., Miami, Florida, which will assume all deposits of failed Coastal Bank.
Coastal Bank had only two branches, both of which will reopen on Monday as branches of Premier American Bank.
At March 32, 2011, Coastal Bank had total assets of $129.4 million and total deposits of $123.9 million. Premier American will purchase all the assets of failed Coastal Bank. The FDIC entered into a loss-share transaction with Premier American on $108.2 million or 84% of the purchased assets. The loss-share agreement limits the loss on the asset pool acquired from Coastal Bank. According to the FDIC, losses on failed banking assets are minimized by keeping the assets in the private sector.
Premier American Bank was chartered in early 2010 for the express purpose of purchasing failed banks. Premier American is a subsidiary of Bond Street Holdings, LLC, Naples, Florida, which raised over $400 million in funding from private investors. Due to the large number of banking failures since 2009, the FDIC allowed private investment groups to purchase failed banks. Private investors have made multi billion dollar profits buying failed banks due in large part to generous loss-share transactions provided by the FDIC.
Premier American acquired two failed Florida banks last week. Including the purchase of Coastal Bank, Premier American has now made a total of seven failed bank acquisitions. In less than a year and a half, Premier American has established itself as a major banking empire in Florida with in excess of $3 billion in assets.
Coastal Bank is the nation’s 40th banking failure of 2011 and the fifth banking failure in Florida this year. The failure of Coastal Bank will result in a loss to the FDIC Deposit Insurance Fund of $13.4 million.