# d

990 Words4 Pages
First Community Bank of Southwest Florida was the 17th bank to fail in 2013, its problem started in 2009, when people were unable to make payment to the bank. The bank was finally shut down by the FDIC on august 2 of 2013. The first community bank of southwest Florida was a mid-sized bank that has 254 million dollars in assets. The reason it was getting into trouble was because of troubled loans that had been steadily increasing since 2009. The number of troubled loans ballooned during the first two quarters of 2013 eventually leading to it getting shut down on August 2, 2013. FCBSF had a high troubled asset ratio during the end of the 1st quarter which was 417%. Any bank with a troubled asset ratio over 100% has ultimately wound up failing. First Community Bank of South West Florida’s main line of business was loan and leases which consisted of 68% of its assets and liabilities in its final quarter. Capital Adequacy Capital adequacy is capital expected to maintain balance with the risk of exposure of the financial institution such as market risk, credit risk, and operational risk, in order to absorb the potential threats. Therefore the institution must meet the minimum requirement. The CAR requires a minimum of 8% capital ratio however it failed to meet those needs for it final 5 quarters in business. Over the past 5 quarters that First Bank of Southwest Florida existed it failed to meet the minimum requirements for capital adequacy. Capital adequacy Final quarter (JUNE 30 2013) March 31, 2013 December 31, 2012 September 30, 2012 June 30, 2012 CAR -0.314126903% 3.55829142% 5.259940851% 5.433485333% 5.449355633% Equity to total assets -1527/247315= -.6% 4609/265736 =1.73% 8457/260184 =3.02% 8952/279726 =3.2% 8870/ 274354 =3.23... ... middle of paper ... ...posits to totals assets 243618/247315 =98.5% 254226/265736 =95.67% 244878/260184 =94.12% 263258/279726 =94.11% 258279/274354 =94.14% - LTD= Total loans/ total consumer deposits. Criteria is less than or equal to 80%. Consumer deposits to total assets= Total consumer deposits/ total assets. Criteria is more than or equal to 75%. The bank meets the criteria for liquidity should be rated between a 2 and a 3. In conclusion, the reason the bank failed was due to the failure to meet the minimum requirement needed to be profitable. They were affected by the housing and financial crisis which lead too many unpaid loans therefore they were unable to collect interest and principle from their clients. Also, some of the indicators show that the bank was doomed since 2009; the bank could have acted in a more efficient way by getting help from the Fed or sales bond or equity.