Florida and Arizona Banks Become First Failures of 2011

Just one week into the new year and regulators have moved to shut the doors on two community-based lenders in Florida and Arizona.
[IMAGE] Officials at the FDIC say they expect ""bank failures"":http://www.fdic.gov/bank/individual/failed/banklist.html to begin tapering off from last year, when a total of 157 financial institutions were shuttered and the lingering effects of bad real estate loans made at the height of the boom undermined balance sheets and left capital levels below regulatory requirements. The agency ""reduced its 2011 operating budget"":http://dsnews.comarticles/fdic-lowers-budget-as-bank-failures-slow-2010-12-17 in December based upon what it said were indications the financial sector is at least stabilizing.

Florida alone accounted for 29 of the 157 banks that collapsed in 2010 â€" more than any other state in the country â€" and the Sunshine State now also claims the first bank failure of 2011.

[COLUMN_BREAK]

This weekend, state and federal regulators closed down ""First Commercial Bank of Florida"":http://www.fcbflorida.com/ in Orlando. The bank operated nine branch locations, with $529.6 million in total deposits and $598.5 million in assets.

The FDIC brokered a deal with ""First Southern Bank"":http://www.firstsouthernbank.com based out of Boca Raton to take over the failed Orlando institution's operations. First Southern did not pay the FDIC a premium for the deposits and agreed to purchase ""essentially all"" of its assets, of which the FDIC will share in the future losses on approximately $484.3 million.

The Florida bank's closing is expected to cost the FDIC an estimated $78.0 million.

""Legacy Bank"":http://www.legacybankaz.com/ in Scottsdale, Arizona, was also shut down this weekend. With two branch office locations, the bank had approximately $125.9 million in deposits and assets totaling $150.6 million.

""Enterprise Bank & Trust"":http://www.enterprisebank.com of St. Louis, Missouri, agreed to assume all of the deposits and purchase all of the assets of Legacy Bank. Enterprise paid the FDIC a premium of 1.0 percent for the deposits and reached an agreement with the federal agency to share in future losses on $119.8 million of the acquired assets.

The failure of Legacy Bank will cost the FDIC an estimated $27.9 million, according to a statement from the agency.