September 9, 2011 – The First National Bank of Florida, Milton, Florida, became the nation’s 71st banking failure. The Bank was closed by the Office of the Comptroller of the Currency, which appointed the FDIC as receiver.
Founded in 1984, The First National Bank of Florida was an 8 branch, independent community bank which served Northwest Florida. All deposits of The First National Bank of Florida will be assumed by CharterBank, West Point, Georgia, which purchased the failed bank.
All branches of The First National Bank of Florida will reopen on Saturday as branches of CharterBank. All depositors of the failed bank will automatically become depositors of CharterBank. Over the weekend, depositors of The First National Bank of Florida will have full access to their money through the use of checks, ATMs and debit cards.
The First National Bank of Florida was swamped by a tidal wave of defaulting loans as the Florida real estate market collapsed. The failed bank had a staggeringly high troubled asset ratio of 556% compared to a national median of 14.3. Once a bank’s troubled asset ratio exceeds 100%, the probability of failure becomes extremely high and The First National Bank of Florida was no exception to this guideline.
The First National Bank of Florida was under regulatory scrutiny since it was issued a Cease and Desist Order in March 2009 by the OCC for violation of various rules and regulations and unsafe and unsound banking practices.
The First National Bank of Florida had total deposits of $280.1 million and total assets of $296.8 million. CharterBank will purchase all of the failed Bank’s assets subject to a loss-share transaction with the FDIC that will limit the loss to CharterBank on the asset pool purchased. The loss-share transaction covers $216.3 million or 73% of the failed bank assets acquired. The FDIC maintains that by keeping failed bank assets in the private sector, losses on the portfolio are minimized.
CharterBank, owned by parent holding company Charter Financial Corp, was established in 1954 and is a full-service community bank with 10 branches. CharterBank is profitable and has $1.2 billion in total assets.
In October 2001, CharterBank reorganized into a mutual holding company concurrent with an initial public offering of the bank’s stock. Investors in the IPO have been dealt severe losses as Charter Financial Corp stock’s price plunged from the $55 level in 2008 to $7.76 at today’s close. Extremely unfavorable conditions in the banking industry and an economy in near depression have made it difficult for banks to recover.
The failure of The First National Bank of Florida will result in a loss to the FDIC Deposit Insurance Fund of $46.9 million. The First National Bank of Florida is the nation’s 71st banking failure for 2011 and the 11th in Florida.