Small Florida bank is 17th bank failure in '08

Business Materials 1 November 2008 04:17 (UTC +04:00)

U.S. bank regulators on Friday closed Freedom Bank in Florida, the 17th bank to fail this year as the weakening economy and falling home prices take their toll on financial institutions, Reuters reports.

Customers of the banks' four branches can access their insured deposits over the weekend by check, teller machine, or debit card, the U.S. Federal Deposit Insurance Corp said.

Fifth Third Bank will assume the Florida bank's insured deposits, the FDIC said. Freedom Bank will reopen on Monday as branches of Fifth Third Bank.

Freedom Bank had total assets of $287 million and total deposits of $254 million as of October 17, the regulator said.

The failure is expected to cost the FDIC's insurance fund between $80 million and $104 million. The insurance fund stood at about $45 billion at the end of June, which is the most updated figure publicly available.

A financial rescue plan passed by Congress earlier this month temporarily raised the limits on deposit insurance to $250,000 per account from $100,000.

Fifth Third's acquisition of Freedom Bank's deposits was the "least costly" alternative for the FDIC's insurance fund, the regulator said. The FDIC's fund has been dented by increased bank failures this year, including Washington Mutual, the largest bank failure in U.S. history.

In 2007, three U.S. banks failed.