Banks Fail in Florida, Arizona

Banks Fail in Florida, Arizona

WASHINGTON (TheStreet) - State regulators shuttered two banks on Friday, for the first closures of 2011 following 157 shutdowns during 2010.

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More than 300 banks have failed since the financial crisis kicked in the latter half of 2008. 2010's total, which came after 140 failures in 2009, was the largest number of failures in a single year since 1992.

Friday's combined failures cost the Federal Deposit Insurance Corp.'s deposit insurance fund a combined $105.9 million.

Both failed banks had been previously included inTheStreet's Bank Watch List of undercapitalizedinstitutions, based on third-quarter regulatory data provided by SNL Financial.

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First Commercial Bank of Florida

The Florida Office of Financial Regulation seized First Commercial Bank of Florida of Orlando. The FDICwas appointed receiver and sold the failed bank's $598.5 million in total assets and $529.6 million in total deposits to First Southern Bank of Boca Raton, Fla.

First Commercial Bank of Florida had been operating under a Prompt Corrective Action directive handed down by the Federal Reserve on Sept. 27, under which the bank agreed to raise sufficient capital to become adequately capitalized or sell the bank within 45 days. The order followed a written agreement in March when First Commercial Bank of Florida agreed to take various actions to improve its credit quality and submit a capital plan within 60 days. The bank was negatively capitalized as of Sept. 30.

The failed bank's nine offices were scheduled to reopen Monday as First Southern Bank branches. The FDIC agreed to cover 80% of losses on $484.3 million of the assets acquired by First Southern Bank and estimated the cost to the deposit insurance fund would be $78 million.

Legacy Bank

The Arizona Department of Financial Institutions took over Legacy Bank of Scottsdale and appointed the FDIC receiver. The FDIC sold the failed bank's $125.9 million in deposits for a 1% premium to Enterprise Bank & Trust of St Louis, Mo. Enterprise Bank & Trust also agreed to assume the failed bank's total assets of $150.6 million, with the FDIC agreeing to cover losses on $119.8 million.

The acquiring bank is the main subsidiary of Enterprise Financial Services (EFSC_).

Legacy Bank had been operating under a Prompt Corrective Action Directive it entered into with the FDIC in May, under which the FDIC said the bank had been undercapitalized for nearly a year and the bank's management was required to raise enough capital through the sale of shares for the bank to become adequately capitalized or sell the bank to another institution.

As of Sept. 30, the bank remained undercapitalized and its nonperforming assets - including nonaccrual loans and repossessed real estate - made up a critically high 14.42% of total assets.