Freedom Bank had been operating under state and federal supervision since July 2007 when it entered into a memorandum of understanding with the FDIC and the Florida Office of Financial Regulation. The memorandum required the bank to take corrective actions related to growth, loan administration and management of classified assets.
An order or cease and desist was issued in early September by the FDIC and the Florida Office of Financial Regulation and was made publish by the FDIC on Oct. 30th. The bank previously had been operating under a memorandum of understanding with state and federal regulators. The order had set a deadline for the bank to raise capital and eliminate bad loans, among other requirements.
The bank obviously, could not do that in the timeline of the order.
From the FDIC Website:
"Freedom Bank, Bradenton, Florida, was closed today by the Commissioner of teh Florida Office of Financial Regulation, and the Federal Deposit Insurance Corporation (FDIC) was named reeiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Fifth Third Bank, Grand Rapids, Michigan, to assume all of the deposits of Freedom Bank.
As of October 17, 2008, Freedom Bank had total assets of $287 million and total deposits of $254 million.
The FDIC estimates the cost of the failure to its deposit-insurance fund will be between $80 million and $104 million."
Michigan based Fifth Third Bank assumed all of Freedom Bank's deposits for a premium of 1.16%. Fifth Third will also purchase roughly $36 million of Freedom Bank's assets. The remaining assets will be retained by the FDIC for later disposition.
Rickey McCullough, ombudsman with the FDIC stated: "For [customers] it's transparent. It's business as usual." "There were no uninsured deposits in this transaction. All the depositors were insured, even the ones over the new $250,000 limit." All deposits were insured because they were assumed by Fifth Third Bank, McCullough said.
The bank posted a net loss of $7 million for the second quarter and had lost $14 million year-to-date. At the end of the third quarter, Freedom Bank's losses for the year stood at $18 million. Freedom Bank was struggling with roughly $35 million in non-performing loans.
New temporary signs had already gone up at Freedom Bank's four branches Sunday.
Freedom Bank was the 17th bank to fall this year.