First Priority Bank Shut Down in Florida - Smells Fishy

Author:  Rob K. Blake        Published: August 2, 2008

First Priorty Bank of Brandenton Florida shut down Friday by regulators. All six branches of First Priority Bank will open Monday as SunTrust branches according to the FDIC.

The Federal Deposit Insurance Corporation (FDIC) as it has done in many of the recent bank failures, took receivership of the bank and immediately inked an agreement with another bank to attending to depositors needs…in this case Altanta based SunTrust Bank.

Was First Priority That Weak?

According to the LA Times, First Priority Bank was shut down due to holding about $13 million in uninsured deposits. The First Priority Bank balance sheet holds $259 million in assets and $227 million in deposits.

I don’t know about you but this is starting to look like government assisted leveraged buyouts…right?

$13 million of uninsured deposits doesn’t sound like a lot to me given the banks assets and depositor base.

Were they given an opportunity to raise the necessary capital?

Why were they not given an opportunity to borrow the $13 million from the Treasury or the Fed? The new law just past gives Fannie Mae and Freddie Mac that opportunity if they were shy on reserves?

Is the Government Playing Favorites

When the Fed brokered the the deal a year ago for JPMorgan to takeout Bear Stearns for $8 bucks a share…there were cries of foul play from stockholders and employees both. In that deal the Fed took on a $1 Billion liability indemnifying JPMorgan from losses.

Ye no government help for a measily $13 million to give an otherwise solid regional bank, First Priority Bank, a chance? It doesn’t make any sense. Unless…

Could the FDIC and the Treasury be using this public fear to help consolidate the retail banking industry into the hands of the mega banks?
The one bank failure that got this whole thing kicked off…the IndyMac Bank failure was triggered by a politician…Senator Chuck Shumer.

John Reich, the director of the Office of Thrift Supervision, blames the run on IndyMac that lead to depositors withdrawing $1.3 billion out of IndyMac in a few days on Shumer. The media ran with the story for days scaring the devil out of depositors all over the country.

In rides the government to protect us…right? Handing over the reigns of potential viable banks to mega-banks, and we all think, “Thank goodness Chuck Shumer and the FDIC is there to protect us”.

In a few years when a handful of mega-banks are that’s available to consumers and costs go throught the roof…we can look back and thank an overjeaous FDIC, Fed, and in other government official who helped wipe out the mega-bankers competition.

Time will tell…for now say good-bye to First Priority Bank…but stay tuned…this aint over…

Good Luck!

Author: Rob K. Blake