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Robert Trigaux

Cost of Florida's 12 bank failures so far this year? $640.9 million to the FDIC, and counting



lydianbank_logo.jpgWake up and good morning. Bank failures in Florida alone this year have cost the Federal Deposit Insurance Corp. $640.9 million, a tally shows of the 12 banks to fail in the Sunshine State since the start of 2011. That's an average FDIC cost of failing of $53.4 million.

Nationwide, the FDIC's cost of all U.S. bank failures in 2011 is up to $6.96 billion, which means Florida banks so far this year have cost the FDIC 9.2 percent of the nation's total cost. While Florida bank failures are more numerous than those in most other states, many of the banks that failed here are small, thus keeping their costs to the federal deposit insurance fund relatively modest.

Here's the entire list of U.S. bank failures and their individual costs to the FDIC. 

Surprisingly, the Florida bank that cost the FDIC the most of all this year is Lydian Private Bank at $293.2 million. So that bank alone, among Florida's 12 to fail this year, cost the FDIC  46 percent of the entire expense of failures in this state.

(Lydian Private Bank, a Palm Beach bank with an office in downtown Tampa, was originally founded by Rory Brown, a former executive of subprime lender Ocwen Financial Corp. in early 2000 as Virtual Bank.  In 2002, the Bank changed its named to Lydian Private Bank and focused on serving high wealth individuals through their wealth management division. Brown decided to name the bank after the country of Lydia (current day Turkey) which produced the world’s first coins around 600 B.C.  A copy of a Lydia coin became the Bank’s trademark symbol, representing old wealth.) Check out these photos of the Greek-themed (Greece? Turkey? whatever...) party promoting the opening of Lydian Bank in Tampa.

oldharborbanklogo_new.jpgThe latest bank to fail, Clearwater's Old Harbor Bank, happened this past Friday. Bank analyst Ken Thomas in Miami notes that Old Harbor was in such terrible shape that even last year it had "negative" capital, raising questions about why the FDIC took so long to close it. This is the same bank that a Manatee County bank, Community Bank & Co. of Lakewood Ranch, announced it would buy this past summer. Community Bank later stepped away from this deal and, frankly, it is mystifying to me why the bank ever wanted Old Harbor (given its severe problems) in the first place. So somebody, apparently, saw the error of Community Bank's ways and pulled the plug just in time. Give that person a bonus.

That still means there are 87 Florida banks still under severe enforcement actions placed on them by federal regulators for problems ranging from weak capital, bad lending habits, poor management or sleepy boards of directors.

-- Robert Trigaux, Business Columnist, St. Petersburg Times

[Last modified: Tuesday, October 25, 2011 7:06am]


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