On Friday, January 22, 2010, Premier American Bank, Miami, FL was closed by The State of Florida Office of Financial Regulation. Subsequently, the Federal Deposit Insurance Corporation (FDIC) was named Receiver. All deposit accounts, excluding certain brokered deposits, have been transferred to Premier American Bank, N.A., Miami, FL, a newly chartered National Bank.
In addition to assuming all of the deposits of the failed bank, Premier American Bank, N.A. agreed to purchase essentially all of the assets.
The FDIC and Premier American Bank, N.A. entered into a loss-share transaction on $300 million of Premier American Bank’s assets. They will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. However, as part of this transaction, the FDIC will acquire a cash participant instrument. This instrument serves as additional consideration for the transaction.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) for this failure will be $85 million. Premier American Bank is the fifth FDIC-insured institution to fail in the nation this year, and the first in Florida.
Distressed Pro’s BankProspector shows that Premier American Bank reported capital adequacy of 2% with nonaccrual real estate loans of $88 million, an OREO balance over $3 million, and non-current real estate loans at approximately 32%, the majority of which are in multifamily and construction.
Premier American Bank Miami, FL Cause of Death: Multifamily and Construction Loan Complications.
Following the bank’s failure, FDIC sold four of the Miami-based branches, as well as $326 million in deposits and some of its assets to Bond Street Holdings, a Naples-based company, and now parent company to Premier American Bank, N.A.. Dan Healy, the Executive Chairman of Bond Street Holdings noted that the real estate crisis in Florida has made it hard for many banks to lend significantly to small businesses, but stated, “I think it’s a profitable place.”