Glimpse inside two Bradenton bank failures
Wake up and good morning. What's up with banking in Bradenton where more than a fair share of financial institutions have gone bust in the past year, and where bank oversight by regulators is a new focus of criticism?
Let's cut to the chase. If they keep mucking up bank supervision there, how do we know the rest of the oversight of Florida banks is any better?
As the Dow Jones wires report, federal and state regulators didn't take the steps necessary to prevent Bradenton's Freedom Bank from failing last October, despite obvious problems at the firm, a government watchdog said in a report released this week. Once seized, Freedom Bank was sold to Fifth Third Bank in Grand Rapids, Mich.
The report comes from the Office of Inspector General for the Federal Deposit Insurance Corp. It says Freedom failed primarily due to an aggressive growth strategy that relied on high-risk commercial real estate loans, poor underwriting and a growing dependence on high-priced and brokered deposits (always a telltale sign of trouble ahead). But missteps by FDIC and Florida regulators aggravated the problems that led to the bank's demise. It''s a fascinating read, as such reports go, and a rare public post mortem on what happened. Read the report in full here.
And Freedom bank is not the only Bradenton institution to fall under the microscope. First Priority Bank, which also failed in 2008, is criticized for poor management, as noted in the Sarasota Herald Tribune. In fact, First Priority and Freedom seemed joined at the hip in their quest to grow too fast, make poor loans and rely on overpriced deposits to attract money. Here's the FDIC's inspector general report, in full, on First Priority.
That's two strikes in the past year to Bradenton's banking culture.
-- Robert Trigaux, Times Business Columnist