PREVIOUS COVERAGE | Bradenton-based Flagship bank shuttered

gagostin@bradenton.comOctober 24, 2009 

BRADENTON — A scene that’s become all too familiar to banks nationwide played out at the Bradenton-based Flagship National Bank on Friday night.

Florida Highway Patrol troopers arrived at the bank at 26th Street West at 6 p.m., escorted regulators into the bank, and staff members were told Flagship was closing.

Six other banks closed across the nation Friday, lifting the U.S. bank closure tally to 106 for the year.

First Federal Bank of Florida, headquartered in Lake City, entered into a purchase agreement with the FDIC to assume Flagship’s $175 million in deposits.

Flagship had $190 million in assets as of June 30.

“The most important thing is people just need to be calm,” said Glenn Watler, an ombudsman with the FDIC.

Watler, who arrived at Flagship on Friday night to assist with the notification, said deposits will continue to be insured by the FDIC and customers can continue writing checks, using ATM and debit cards and access their money. In addition, Watler said First Federal intends to keep all four branches, three of which are in Sarasota, open.

“It’s business as usual,” Watler said. “No one has lost a penny because of this.”

Flagship is the ninth Florida bank to close this year and the third bank in Bradenton to close since August 2008. Regulators shut the Bradenton-based Freedom Bank in October 2008 and First Priority Bank in August 2008.

Partners Bank and Hillcrest Bank Florida, both of Naples, also shut their doors Friday.

The 106 failures are the most since in any year since 120 banks collapsed in 1992 and up from the 25 banks that closed in 2008 and three closures in 2007.

Flagship will reopen Monday as branches of First Federal Bank of Florida, and depositors will automatically become customers of First Federal Bank of Florida.

“The West Coast has been pretty heavy for bank failures,” said Philip Van Doorn, senior banking analyst for TheStreet.com Ratings.

“This is your perfect boom-town scenario. Whoever came in late to build housing in the area is suffering right now. It’s not surprising to see this happen, and I’m sure it’s going to happen more.”

The failure of Flagship ends more than a year of financial deterioration for the institution.

The bank reported a $7.1 million loss at the end of 2008, and it has lost $9.7 million during the first half of 2009.

In addition, Flagship has seen its noncurrent loans and leases spike from $3.9 million in June 2008 to $25.4 million in June 2009, giving the bank a 19.25 percent ratio of nonperforming loans to total loans.

These numbers contributed to Flagship receiving a zero-star rating from Bauer Financial, as well as the lowest rating from TheStreet.com, an E- in financial strength.

Regulators from the Office of Comptroller of the Currency shut down Flagship.

— The Associated Press contributed to this report.

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