Florida Closes First Priority Bank

First Priority Bank of Bradenton, Fla., was closed late Friday by the state Commissioner of Financial Regulation, after the bank announced earlier in the day that it was critically undercapitalized.

The Federal Deposit Insurance Corporation was named receiver, and arranged a purchase and assumption agreement with SunTrust(STI Quote). The failed institution's six branches will reopen Monday as branches of SunTrust Bank, which has assumed First Priority's $214 million in insured deposits.

First Priority had total assets of $259 million as of June 30. Uninsured deposits totaled approximately $13 million.

In most bank failures, depositors become creditors to the receivership for the amount any uninsured funds. These creditors then receive "dividends" when the FDIC disposes of the failed institution's assets. First Priority's uninsured depositors will receive payment early next week for 50% of their uninsured balances.

First Priority topped TheStreet.com's list of Florida's Most Troubled Banks and Thrifts, published in early May, since the institution had a very high level of problem loans and was considered undercapitalized per regulatory guidelines.

TheStreet.com Ratings downgraded the institution's financial strength rating to E- (Very Weak) on June 20, after downgrading to E from D- (Weak) in March.

The privately-held institution's second-quarter net loss of $9.4 million wiped out most of its remaining capital. As of June 30, First Priority's leverage ratio was 0.70% and its risk-based capital ratio was just 1.72%. These ratios need to be at least 5% and 10% for a bank or S&L to be considered well capitalized under regulatory guidelines.