June 25, 2010 – Peninsula Bank, Englewood, Florida was closed today by the Florida Division of Financial Institutions, which appointed the FDIC as receiver. Florida now leads the nation with 14 banking failures. Illinois is a close second with 12 banking failures and Georgia has a total of 9.
Peninsula Bank was acquired by Premier American Bank, National Association, Miami, FL, under a purchase and assumption agreement with the FDIC. Premier American, N.A. a recently chartered national bank, is a subsidiary of Bond Street Holdings, LLC, Naples, Florida. Bond Street Holdings was allowed to establish a new national bank for the express purpose of purchasing failed banks. Bond Street has raised over $400 million from private investors for the purpose of investing in failed banks. Premier American, N.A.’s first acquisition of a failed bank occurred on January 22, 2010 when they acquired the failed Premier American Bank, Miami, FL.
As the FDIC has struggled to find healthy banks suitable or capable of acquiring failed banks, it has allowed private investor groups to acquire failed banks. Private investment groups are expecting a handsome return on their investment if property markets and the economy recover. In addition, the FDIC provides generous protection to the private purchasers of failed banks through a loss-share transaction.
In the case of Premier Bank, the FDIC entered into a loss-share transaction on $300 million of the failed banks $350 in assets. In the current acquisition of Peninsula Bank by Premier American Bank, N.A., the FDIC has agreed to provide loss protection on $437.6 million of the failed bank’s assets. Premier American, N.A. agreed to purchase essentially all of failed Peninsula Bank’s $644.3 million in assets and to assume all deposits of $580.1 million. Premier American did not pay the FDIC a premium for the purchase of failed Peninsula’s deposits.
The recently created Premier American Bank, N.A. is now approximately a one billion dollar bank by asset size with 17 branches, based on the acquisition of the failed Peninsula Bank and Premier Bank from the FDIC.
The loss to the FDIC for closing the two banks acquired by Premier American, N.A. was $85 million for Premier Bank and $194.8 million for Peninsula Bank.
The 13 branches of failed Peninsula Bank will open as usual on Monday and customers of Peninsula Bank will have full access to their accounts over the weekend.