Dedicated to Deposits: Deals, Data, and Discussion

Bank Failure - Freedom Bank of Florida

POSTED ON BY

Freedom Bank of Florida was closed today by Florida regulators, and the FDIC was named receiver. Here's the FDIC's press release link, and here's a summary of the closure:
  • Closed Bank: Freedom Bank
  • Location: Bradenton, FL
  • Size: 4 branches, $287 million assets, $254 million deposits
  • Possible Uninsured Deposits: ALL deposits transferred to acquiring bank
  • Acquiring Bank: Fifth Third Bank
  • Cost to Deposit Insurance Fund: $80-$104 million (estimated)
  • 2008 closures: 17th bank to be closed this year
  • Financial Ratings: 0 star at BauerFinancial, 1 star at Bankrate.com
This is another closure in which no depositors will lose money, even those with over the FDIC limits. As stated in the FDIC Q&A Guide, it's an All-Deposit Transfer in which all deposits have been assumed by Fifth Third Bank.

Similar to past closures, Freedom Bank customers may withdraw funds from a CD without an early withdrawal penalty (see Q&A). Those with Freedom Bank CDs will likely hope to keep the high rate until maturity. According to this Q&A, "All outstanding CDs will continue to accrue interest at the contract rate until maturity."

I've posted on Freedom Bank a few times in the past. They have offered some very attractive CD rates. Since I've been following the bank, it has always had a very low financial rating for soundness. It was a fairly new bank that was established in 2005.

Here's the FDIC list of all the recent bank failures. For more info on FDIC coverage, please refer to my Facts about FDIC and NCUA post and my recent post on FDIC News, Resources and History. For the recent changes to FDIC coverage, please refer to this post

Thanks to the readers who sent me news of this closure.
  Tags: Freedom Bank

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Comments
3 comments.
Comment #1 by Anonymous posted on
Anonymous
BG ... how does a bank with only 4 branches end up costing the FDIC between 80 and 104 million dollars? Wow, that sure seems out of proportion.

1
Comment #2 by Banking Guy (anonymous) posted on
Banking Guy
That's a good question. I'm not sure where the costs come from especially when it appears Fifth Third agreed to assume all the deposits. Perhaps they had many loans that had to be written off.

1
Comment #3 by Anonymous posted on
Anonymous
I'm sure the FDIC would have a logical explaination, but it appears any government run program always cost more than it should. They are handing out taxpayers money and there is always more where that came from. If not, they just raise taxes.

1