WASHINGTON — Florida banking regulators Friday shut down Commerce Bank of Southwest Florida, marking the 124th U.S. bank to succumb this year to the struggling economy and rising loan defaults.
The Federal Deposit Insurance Corp. took over the small bank in Fort Myers, Fla., with $79.7 million in assets and $76.7 million in deposits.
Central Bank, based in Stillwater, Minn., agreed to assume the deposits and assets of Commerce Bank of Southwest Florida. The failed bank’s sole branch will reopen Monday as a branch of Central Bank. In addition, the FDIC and Central Bank agreed to share losses on roughly $61 million of Commerce Bank’s loans and other assets.
The failure of Commerce Bank is expected to cost the federal deposit insurance fund about $23.6 million.
It was the 12th failure of a Florida bank this year. Failures also have been concentrated in California, Georgia and Illinois.
As the economy has soured, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have accelerated and sapped billions out of the federal deposit insurance fund. It has fallen into the red.
The banking crisis has grown so intense that it has started to capture banks that regulators deemed healthy only months ago.
This month has seen the failure of three banks that received government money purportedly earmarked to improve lending by injecting capital into healthy banks.
California-based Pacific Coast National Bank and United Commercial Bank both were seized by the FDIC this month, and big commercial lender CIT Group Inc. filed for bankruptcy. The three received a total of $2.63 billion from the $700 billion financial bailout program. All of that taxpayer money is likely to be lost.
It comes after then-Treasury Secretary Henry Paulson said last October in announcing the program that “there is no reason to expect this program will cost taxpayers anything.”
In all, more than two dozen banks that received “healthy bank money” have faced regulatory actions suggesting they are not stable and could fail. These actions range from informal written agreements to cease-and-desist orders — the last notice regulators issue before closing a bank.
More than $5 billion in taxpayer money could be lost, depending on which of these shaky banks survive.
The developments demonstrate how quickly the banking system has deteriorated since the banks started receiving money last fall.
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