Alison Vekshin and David Mildenberg
Saturday, Nov 1, 2008
Freedom Bank of Bradenton, Florida, became the 17th U.S. bank seized by regulators this year as the deepest housing slump since the Great Depression triggers record foreclosures and mounting losses.
Freedom, with $287 million in assets and $254 million in deposits, was shut yesterday by the Florida Office of Financial Regulation and the Federal Deposit Insurance Corp. was named receiver. Fifth Third Bancorp of Cincinnati will assume the deposits and buy $36 million of assets, the FIDC said. Freedom’s four offices will open Nov. 3 as Fifth Third branches.
Regulators have closed the most banks this year since 1993, and the collapses of Washington Mutual Inc. and IndyMac Bancorp Inc. were among the biggest in history. The housing slump and tight credit led to enactment of a $700 billion bank-rescue plan and the U.S. Treasury is using the fund to buy $250 billion in preferred shares in banks.
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Fifth Third will pay a premium of 1.16 percent, or about $2.9 million, to assume the deposits, the FDIC said. The deposit insurance fund, supported by fees on insured banks, will pay an estimated $80 million to $104 million, the agency said.
State regulators in August closed First Priority Bank, also based in Bradenton, which is south of Tampa on Florida’s Gulf Coast.
Fifth Third on Oct. 28 said it will sell $3.45 billion in preferred shares and warrants as part of the Treasury Department’s plan to boost bank capital ratios and promote lending.
This article was posted: Saturday, November 1, 2008 at 5:34 am