Regulators close down small bank in Florida

WASHINGTON — Regulators on Friday shut down Freedom Bank, a small bank located in Bradenton, Fla. It was the 17th failure this year of a federally insured bank.

The Federal Deposit Insurance Corp. was appointed receiver of the bank, which had $287 million in assets and $254 million in deposits as of Oct. 17.

The FDIC said the bank's deposits will be assumed by Fifth Third Bank of Grand Rapids, Mich. Its four branches will reopen Monday as offices of Fifth Third Bank.

The agency said depositors of Freedom Bank will continue to have full access to their deposits, which will still be insured by the FDIC.

In addition to assuming Freedom Bank's deposits, Fifth Third Bank also will acquire about $36 million of the failed bank's assets. The FDIC will retain the remaining $251 million or so for eventual sale.

The FDIC estimated the resolution of Freedom Bank will cost the federal deposit insurance fund between $80 million and $104 million.

Regular deposit accounts are now insured up to $250,000 as part of the new financial rescue law enacted in early October. The limit on individual retirement accounts held in banks remains at $250,000.

The 17 bank failures so far this year compare with three for all of 2007 and are more than in the previous five years combined. It's expected that many more banks won't survive the next year of economic tumult. The pressures of tumbling home prices, rising mortgage foreclosures and tighter credit have been battering many banks, large and small, across the nation.

The failures this year include that of Seattle-based thrift Washington Mutual Inc. in late September, the biggest bank collapse in history. It had $307 billion in assets. In July another big savings and loan, IndyMac Bank based in Pasadena, Calif., failed and was seized by regulators with about $32 billion in assets.

The FDIC estimates that through 2013 there will be about $40 billion in losses to the deposit insurance fund, including an $8.9 billion loss from the failure of IndyMac Bank. The FDIC is raising insurance premiums paid by banks to replenish its fund, which stands at around $45.2 billion, below the minimum target level set by Congress and the lowest level since 2003.

In addition, the FDIC may guarantee nearly $2 trillion in U.S. banks' debt and deposit accounts in an effort to break the crippling logjam in bank-to-bank lending.