Slow Bank Failure Friday

Despite a problem bank list brimming with about 400 institutions, the FDIC shuttered only one bank on Friday. The agency does not name the institutions on its problem list so it's impossible to know if Commerce Bank of Southwest Florida was among them. The small, Fort Myers-based bank had only one branch. It is the 124th bank failure of the year. (See ProPublica's failed bank list).

The bank had total assets of $79.7 million and total deposits of approximately $76.7 million. Central Bank of Stillwater, Minn.,  assumed all the deposits and purchased most of the assets.

It's the fourth time this year that Central Bank has purchased a failed institution from the FDIC. The acquisitions, previously all in Minnesota, have allowed the bank to leap from $425 million in assets to $925 million, Central's president told the Pioneer Press. Yet banks with extra capital for acquisitions that are willing to take a risk on woeful local economies seem to be in the minority. An FDIC spokesman told The Miami Herald that the agency had contacted 536 potential bidders for Commerce Bank of Southwest Florida but drew only three bids.

Central Bank also agreed to share in approximately $61 million of the losses in Commerce's portfolio. Commerce failed by the same manner that has felled so many banks in high-growth areas like Florida recently. It invested heavily in residential real estate construction. Loans were securitized and sold to Wall Street. When the bubble burst, these banks were left with loans on their books and in many cases empty lots with no hope of development.

The FDIC estimates that the cost to its deposit insurance fund of Commerce Bank's failure will be $23.6 million.

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